Mel, Tim, and Bill agreed to partner in a small rehab business. Initially, they were enthusiastic contributors until their first project took more work than Mel initially estimated; Tim wanted morning meetings and long lunch hours; and Bill decided to go on vacation even though the project was not complete and ready to sell. As Figure 5.2 indicates,
A) it's smart to begin the partnership with honest communication of what each partner expects to give and get from the partnership.
B) it's smart to organize the business as a limited liability company to reduce the financial risks that put pressure on members of the partnership.
C) it's smart to designate one of the partners as the primary partner with final authority to call all the shots.
D) it's smart to enter into partnerships with people who have similar educational and cultural backgrounds and similar personalities.

Question

Quizplus · Accepted Answer

Starting a partnership with honest communication of expectations and responsibilities can help prevent misunderstandings and conflicts later on. Assigning roles and responsibilities and having clear communication channels can also be helpful in managing the partnership. While organizing as a limited liability company can reduce financial risks, this may not be the best solution for every partnership. Designating one partner as the primary decision-maker may also not be the best solution, as all partners should have a say in important decisions. Having similar backgrounds or personalities may not necessarily be important as long as there is good communication and understanding between partners.

Mel, Tim, and Bill Agreed to Partner in a Small