Business partnerships in Dubai are like any other where there is strength in numbers, with an equal level of risk. In some cases, joining hands with another person or company can help grow your investment and expand your reach through pooling skills, knowledge, and financial assets. But, conversely, partnerships can be more troublesome than their worth.
Before laying the groundwork for business with your partner, it is essential to consider your options and the associated potential benefits and risks. You also need to ensure that you and your partners are on the same page when it comes to business operations. Here is what you need to know before getting into a business partnership in Dubai.
Capital Contributions
Your capital contributions are what you bring to your partnership, both financially and skill-wise. Therefore, you'll want to ensure that you and your partners have roughly equal investments in your business. Otherwise, one of you could feel taken advantage of because of their more significant contribution.
The same goes for skills. For example, if one person brings marketing experience and another accounting, those skills must be equally valued. Again, there can be some room for negotiation here, but it's best to start with a relatively even split, so neither party feels they're doing all the work while getting little or no credit.
Profit and Loss Distribution
You and your business partners must clearly understand how profits are shared at all stages of the venture. It can be onerous to make such decisions early on when both parties attempt to do what's best for the company. However, if you don't have these discussions soon enough, it may leave you all with more questions than answers later on down the road. So put together an outline for how the money will be distributed among partners during different stages of your company's growth to avoid surprises whenever things get tough.
Decision Making Protocols
Working on your own allows for easy decision-making and moving from one task to another. However, things can become much more difficult when two or more people are involved. In your business partnership in Dubai, there will be disagreements which will slow down progress. To avoid these complications, set up ground rules at the beginning of your business. Outline the role of everyone in the company and how you will work as a team to reach decisions on time.
Handling Disputes
Disagreements are bound to happen at any time between partners. The key is how you handle them before they become irreparable. As with any partnership, respect and open communication are vital to maintaining trust. Therefore, at all times, avoid doing activities that may threaten the well-being of your establishment, such as sharing your trade secrets with competitors.
Managing Finances
Financial management is a crucial part of any business partnership in Dubai. However, having one partner manage your finances is like putting too much control of the company in one person's hands. So agree on how banking transactions, account signatures, and loans should be managed to avoid any financial mess.
Death or Exit of a Partner
If an unexpected event like death forces a partner out of your company, you must have a legal document showing how you will pay off their pending profits. This is known as a buy-sell agreement. Without one, if one partner dies, it can lead to differences over who gets what share of profits and assets from your business.
Start a Business Partnership in Dubai
Every entrepreneur should consider critical points before starting a business partnership in Dubai, including capital contributions, financial management, decision-making, and exit strategies.
Sentinel Business Centers is one of UAE's best business solutions companies that offer complete support for starting a new investment in the Middle East. We help you handle all licensing and legal requirements for establishing new ventures in Dubai quickly, affordably, and hassle-free. Contact us today for more information about how we can help your start-up succeed.