Everything in the guide

This answer sets the path. For a new business, we talk about how to get it on its feet. For a business that already runs, we write down where things stand today — what each partner has put in, and what the business owes.

Fill in each partner's full details. If there is ever a dispute, or after 120 years, it must be clear exactly who the partners were. In halacha, a partnership is between people, not companies — so we need each partner's own name, even if he signs through an entity.

Tap the names. We will use this later for the salary questions.

When a partner signs, he signs for himself and for the business entity. So the entity's exact name must be in the agreement. If there is more than one entity, list them all. If no entity exists yet, check the box below.

This draws the line around the partnership. What is described here is in. What is not described here may be argued about later. It also sets the ground for the non-compete rules. Think about today — and about where you want to grow: one platform or all of them, one city or the whole country.

The story shows what each partner meant when he went in. If there is ever a dispute, the story explains the intent behind every clause. Write it in plain words. Also write what you both agree is true today — how much is already in, and where the business stands.

A clear start date stops arguments later about profits and costs from "before we started."

A personal guarantee means: if the business does not pay, the bank comes to that partner's home. The agreement must say who carries a PG — and what happens to it when the partners part ways.

It can be a mix. One partner lent money to the business. Another took out more than his share. A third is owed his investment back. Tap everything that applies — each one gets its own clear clause.

This is the whole deal for the new partner: how much he brings, by when, and what he gets. The clearer it is here, the fewer claims later. Write only the deal itself here. When and how the money actually comes in is asked later, under "Who brings the money."

This is the base for everything that follows — profits, losses, votes, buyouts — unless you choose something different at a later question (for example, votes can work differently from ownership). Write the exact percent for each partner. The total must be 100%.

Most partners say "of course." But it must be said clearly. In one case, a money partner put in $5,000,000 for 50% of an Amazon business. The business sold for $125,000,000. The money partner asked for half. The working partner said the 50% was only for the yearly profits — not for a sale.

The hardest question is asked while things still go well. That is exactly the right time. Without an answer here, a failed business turns into a fight over whether the working partner owes the money partner anything.

Without a clear finish line, one partner will say "we are there" and the other will say "we are still in the middle." Tap all that apply — together, they are the goal.

This opens the mind to the fact that things take time — and time costs money. A tip from experience: however long you figure, double it.

These three numbers are only for thinking. They do not go into the agreement. They help you pick the right amounts in the next questions, where each partner promises how much he will put in. A new business needs three kinds of money: money until you can send your first invoice, money until the business can carry itself, and money until it reaches its first goal. Most people have no idea how much they will need — until they sit down and add it up.

Here we only ask who. How much, and in what stages, comes next. A true story: three brothers opened a factory. The third came in as the money partner with "I will put in whatever it takes." At $600,000 he stopped — "nobody told me it would take so much." A fourth partner came in for $250,000… and at $3,000,000 the business still had not made a dollar. No one had ever said "up to how much."

A promise to put in money needs a limit. Without one, no one knows when he has done his part. The partner gets his full share right away, on the strength of his promise. What happens if the money is not brought is settled a few questions later.

A plan that hangs on a bank loan needs a Plan B from day one. This matters most in construction (a construction loan, then a refinance), in manufacturing (financing the machines), and in staffing (payroll is weekly, but the money comes in months later).

This settles the cash flow — one of the biggest headaches of a new business. If you chose stages at "Up to how much," the two work together: the stages set the maximum, and here you set when and how the money comes in within each stage.

This is the hardest question — and the most important. Each partner made his move because of the other's promise. The working partner jumped in because money was promised. The money partner put in his money because work was promised. Both left something behind. So what happens when one of them stops? ("On its feet" means what you chose earlier.)

A salary is pay for work. A profit share is pay for owning. Keep the two apart, or every payout turns into an argument. Two rules from experience: partners who work full-time only for this business should take the same salary — it stops "but I work more than you." And a working partner with no salary at all, especially once the money partner has his money back, is a recipe for trouble. (At a siyum, one partner complained to me: "He works when he wants; I sit in the office all day." I asked him to figure what his partner would earn as a salesman on commission. He did the math — and said, "Let's keep taking the same.")

"Doing the books" means: figure the profit, decide how much stays in, and pay out the rest — in the order set in this agreement. The more often, the fewer surprises.

New business people often do not see this: to the investor, the money he puts in is like a loan to the business — he expects it back. For a business that already runs, the old money was handled in "Where the business stands today." Here we talk about the partnership money going forward.

If the business needs money and only one partner brings it, he must know he can get it back as soon as there is money. Otherwise he will not bring it. Note: the agreement also says that no partner may put in or borrow money for the business without written permission from the others (email counts). Money put in without permission cannot be claimed.

The business paid out profit — and now it needs money again. Maybe the profit was paid out too early; maybe something changed since. Either way, the usual first step is to put back the profit that was taken, and only then ask the partners for more. Why the business needs money matters too — a loss, growing too fast, growing slower than planned — but the agreement needs one clear rule for all three.

This covers money to save the business and money to grow. In the next question you can make growth different. One more point: when the one who brings earns extra under a heter iska, it comes from the business — not out of the other partner's profit share. Otherwise the partner who could not bring is hit twice.

Saving = the business needs the money to stay alive. Growing = the business wants money for something new. When saving, the pressure is higher — so you may want stronger rights for the one who brings there, and softer ones here.

The usual claim is "Who gave you the right to do that?" So it must be clear what a partner may do alone — and how the final say is reached. In one case, two brothers split everything equally, until they could not agree on opening a second business. With no rule for who decides, the business stood frozen for a year — until they parted ways.

If you skip this, the budget follows the same rule as the big decisions.

The choices run from "everyone decides everything" (safe but slow) to "each partner runs his own area" (fast, but it needs trust). Experience shows: the clearer the lines, the fewer the fights.

"No" means: no relative comes in on his own. Only with written permission from all the partners, each and every time.

For example, this business needs shipping. May a partner own a trucking company that this business pays for shipping? This is not competition. It is selling to your own business — and that is where the questions about price and trust begin. In one case, a money partner quietly owned the print shop that the magazine paid. When it came out, it all went downhill: "we could have paid much less — but you never bargained, because you are a partner there."

This is not about the same kind of business (that comes next). It is about the same people — selling something else to the same customers. In one case, a roofing partner also owned a framing company. The other partner always wondered: does he give the roofing customers a better price, so he can win the framing job too?

The points add up either way. In a bigger business they can be worth tens of thousands of dollars a year. Better to settle it now. (Often the card is in one partner's name, and he is the one on the hook to the bank.)

This is about during the partnership. The next question is about after a buyout. The two answers should fit each other — strict now and softer later, not the other way around. Without a rule here, a partner can open a competing business with the same customers — a quiet danger.

If he may, be honest with yourself: when you buy him out, are you really paying for something of value?

One more thought from experience: in one case, two partners who could barely stand each other were about to split. Instead, they made peace — and have taken out over a million dollars a year ever since. Before you plan the split, think about the day after.

An outsider who buys a share becomes your partner. This question decides whether you can stop that — and how.

This is sometimes a plus and sometimes a minus. A plus: there is a way out. A minus: when partners know there is no way out, they work things out.

The protection: if the partner who bought the other out sells the business within 12 months for more than the value used — he pays over the difference. This way no one uses gud o agud just to flip the business for a quick profit. (It is always written in when gud o agud is allowed.)

Most people say "never." But in one case, two partners of over 50 years got an offer of $180,000,000. One wanted to sell. The other said, "If it is worth that to him, it is worth that to me." And the first could do nothing.

For example, a business that owns properties. Instead of one partner buying the other out, you may be able to split the properties themselves, and even out the difference with money.

If this is left open, the surviving partner can suddenly find himself in business with the heirs — a partnership no one chose, on either side. Settle it now, while everyone is well. Everywhere in this question, "the heirs" means: whoever his will names — or his heirs, if there is no will.

You can also mix: for the first years one method (e.g., #2), then another (e.g., #3), and once profits pass a set level, a third (e.g., #5).

Terms that cannot be kept help no one. The four ways below are really two choices in one: (a) Does the partnership end right away, or do you stay partners until everything is paid? (b) Is it paid all at once, or in payments? Staying partners is the best security for the seller. Ending right away is the cleanest for the buyer.

One email and one cell phone for each partner. The term sheet goes to every partner. (These also let us reach you if a question comes up.)