Starting a company, just like any other business, needs proper planning and preparation. Starting a partnership company would be an essential part of entrepreneurship, as well as a start-up success for the firm. The reason is that it guarantees complementary skill sets, partners can share expenses, and one individual can effect interactions with the intellectual capital of the other, so they all benefit from the business (Holloway & Parmigiani, 2016, p.460). However, it is not always the case that a partnership company would be great. It can also be tough just like marriages, which mostly do not survive. For a marriage to survive, you have to handle many partnership problems such as money, stress, expenses, ego, and monthly overhead, and so is a partnership business. Following the case of Tom, Dick, and Harry, it is precise that there is a high chance that Marks Ltd and Spencers may not survive. Therefore, what follows in this discussion is a piece of advice to Tom, Dick, and Harry concerning how to make their company survive.
Tips for a Thriving Business Partnership
According to Bayer (2016), there are several tips which are essential for business partnerships. The fact that Tom, Dick, and Harry decided to start a company for selling their cushions, they become obliged to adhere to the tips that will make their business thrive. First, they should have the same vision for their business. Of course, if one partner heads to a different direction in a company, issues may arise. Therefore, Tom, Dick, and Harry should clarify their collective vision for selling the cushions together. Although the partners’ intention for associating could be different, their high-level objectives must be the same. They should all be looking forward to growing as the best company in supplying cushions because they will all enjoy equal profits at the end of everything.
Second, they should recognize each other’s strengths and take advantage of them. In partnerships, each person has a right to contribute to the success of the business. The other members can then identify the positive aspects of the other and learn from them. Aside from that, they should recognize each other’s needs and expectations which people do not always express. Individuals go into partnerships for reasons such as client base, connections, reputation, or expertise (Bayer, 2016). If Tom, Dick, and Harry make their prospects explicit, and ideally write them down, they are likely to avoid upsets among themselves in future. For example, Dick’s purchase of office furniture at ? 12,000 and selling to the company at ?16,000 might be upsetting to Tom and Harry. However, Dick may be trying to achieve his objective of getting into a partnership which the other two individuals do not know. Therefore, to avoid such frustrations, they partners must explicitly define their needs and intentions for being in business together.
Third, they should set the company’s, as well as the individual goals, which build upon the vision they created initially. These goals are supposed to be concrete, measurable, and should also meet the different expectations. Tom, Dick and Harry are doing business together. They verbally agreed to form a company and supply cushions, but they failed to build the company’s goal and their personal accountabilities to meet their expectations. Creating the business's goals, setting personal goals that are in line with those of the company, and ideally taking advantage of the other partners' strengths clarifies the question of which person is accountable for what.
Another important aspect that Tom, Dick, and Harry should put into consideration is the definition, including the accountability, of each of their roles which should not be equal (Sugars, 2008). According to them, it is evident that they have not taken the time to write down their roles in the job explicitly, which is why Tom talks to a milkman to supply the company with milk on credit, but the company further fails to pay the liability. If the partners write down their roles, they would not be able to face such issues because the one in charge of the company’s finances may prevent the company from incurring more debts if it cannot pay for them. Additionally, the person will ensure the business pays all its liabilities accordingly (Bly, 2014, p.24).
Lastly, the partners should know when it is the right time for them to part ways. It would be quite difficult for a company such as Marks Ltd and Spencers to work out even with their best intentions. There may be conflict or one person such as Harry may want to take a new direction in his career. Once Harry decided to start another company, he would have considered drafting an exit agreement even if he was in the middle of his business with Tom and Dick. Such a step would prevent potential conflicts among the partners and would guarantee a lifelong business. Harry, instead, starts Feathers Ltd secretly and makes Marks Ltd and Spencers get into a contract with it. It is a selfish step because it could be that Harry wants to use Marks Ltd and Spencers to make his company – Feathers Ltd grow.
Entering into a Contract
A contract, whether verbal or written, is defined as a legal agreement occurring between two or more parties (Normington, 2013; Singh, 2010, p.4). It happens when one side makes an offer, and the other one accepts it (Singh, 2010, p.18). For example, Tom and the milkman made a contract when the milkman agreed to supply the company with milk upon which he will get paid once the enterprise gets incorporated. The company also got a contract with Feathers Ltd. Tom, Dick and Harry should understand the terms and conditions of entering into such contracts to avoid future problems, which may affect their company. In essence, the two contracts fall under the unfair contract terms which are answerable to the law.
The fact that Tom engaged the milkman into a contract in the name of the company, then the company gets obliged to pay for the milk supplied (Schragis & Frishman, 2014, p.4). Else, the milkman can file a case in the court of law whereby Marks Ltd and Spencers will be held liable for breach of contract and they will for forced to pay the milkman a large sum for compensation (McCormick, 2016). Once the courts decide that the company has to pay for the damages caused, then the directors must abide by the tribunal's decision even if it decides a larger sum than what was initially expected. Such penalties may be a hindrance to the company’s future performance. Thus, Tom, Dick, and Harry may take this issue seriously and pay for the liability even if their contract was verbal.
In addition to that, the contract they signed with Feathers Ltd may also be unfair because it may not be necessary to protect the legitimate interest of the company (ACCC, 2016). Being that they later realized that Harry was the director of Feathers Ltd, then it is open that Harry signed the contract to protect his personal interests and not that of the company. In this case, Marks Ltd and Spencers may choose to breach the contract for fraudulently being induced to enter into the contract by Harry, who hid his identity and led Tom and Dick into signing the contract with his company (Stim, 2016). Aside from that, they can choose to carry on with the contract if it is beneficial to them. Nonetheless, they should know that a company must not go into signing a contract blindly (Steingold, 2015, p.348). There are several things which the required personnel must put into consideration before signing it. For example, the partners should make a proper evaluation of the person on the other end and ensure the person has earned their total trust, before entering into a contract, for the sake of the real business association.
If Carol Ltd seeks to take over Marks Ltd and Spencers, it has to prove that its bid will not result in an anti-competitive concentration (Redwood, 2016). Stronger needs should be placed on companies concerning maintaining capacity if the buyer promises to keep the business while planning to close it in future. However, to approach this issue from a liberal state, it would be wise, just like what Tom, Dick, and Harry did, to sell their shares to a third party (Steingold, 2015, p.358). It would prevent other investors from venturing because they may fail to sell when they take the bid. Those shares remain valuable assets to Marks Ltd and Spencers, but the new owner has to operate or may sell to a different person to run. In that sense, the company is not at risk of the take-over bid from Carol Ltd.
To sum up, it is quite obvious that Marks Ltd and Spencers is at high danger of surviving. Ensuring their company thrives, Tom, Dick, and Harry must follow what is contained in this piece. They must understand what they should do as partners for the success of their company, look keenly on the issue entering into contracts, and more so, work together towards ensuring their business is not lost to a different owner. Having this is mind, they will avoid the potential pitfalls for their company.
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