Page 220 - Social Media Marketing

208 Walk Like a Giant, Sell Like a Madman

Your partnership agreement should include the following:

• Nature and purpose: State the type of business, the purpose
of your relationship, and the roles that each of you will play in
the partnership.

• Capital contributions: State how much startup capital each
partner is contributing to the business and how all of you will
be reimbursed once the business becomes profitable. If more
capital is required later, what percentage of the needed capital
is each partner responsible for contributing? What happens if
that partner cannot contribute his or her portion?

• Profit and loss sharing: Specify how the partners will share any
profits or losses, including how the accounting will be done and
how profits and losses will be reported to all partners.

• Authority: How much authority does each partner have in
running the team and making decisions? Spell it out.

• Signature authority: Who has to sign checks, documents, and
agreements with vendors? Are two or more signatures required
or does one person hold sole authority?

• Addition of new partners: If you add new partners later, how
will the profits be divided? Make sure this is addressed well in
advance of taking on any new partners.

• Dissolution of the partnership: This is one of the most im-
portant areas of any partnership agreement. If the partnership
dissolves for whatever reason, this provides you with an
exit strategy. Your partnership agreement should cover the
following:
• Death of a partner: If a partner dies, how will that partner's
shares be distributed? Will they be given to the deceased's
family or distributed among other partners?

• Buyout: Under what conditions can partners buyout the
interest of another partner-death, divorce, bankruptcy,
illegal activity? Specify the circumstances and how the buy-
out amount will be calculated.