FORMING BUSINESS PARTNERSHIPS
You might have an excellent idea but deploying it will involve both users and partners. In this module, we’ll discuss:
- forming a business partnership
- finding a co-founder
- maintaining corporate partnership in the long term
- approaching a technical founder who can help you build your app idea
The PDF version of this module also includes a comprehensive section for foreign investors and entrepreneurs who would like to conduct business in the Sultanate of Oman.
Being a solo entrepreneur can be a lonely journey. Starting a business is tough and having someone to share the burden with can make a huge difference to your experience.
Finding a co-founder who has a particular skill, like coding or industry experience, not only increases the likelihood of success but could also make you more investable. Here are six things you need to consider before choosing a partner.
You and your co-founder or partner don’t need to agree on everything but you should share the same values. You should also put processes in place that will allow you to communicate throughout the ups and downs of your business journey.
In the early days you’re unlikely to have a big team so you’ll want to partner with someone who’s willing to share responsibilities. It can be helpful if you list all the duties and how you and your partner will divide them. Be realistic about how much time each of you can dedicate.
Distributing financial responsibilities
It can be challenging to talk about finances, but it must be done. A few things you should speak about include:
- Shared equity
- How much voting rights each partner has
- Their contribution of personal income toward the businesses
- Being comfortable with taking on debt finance
- Management and responsibilities of financial duties
- Taking salaries and how much will be re-invested in the business
Partner with the government
If your startup is operating in industries like logistics, fintech or cyber security you may benefit from forming government partnerships.
Mala’a, a fintech company from the MENA region, has partnered with Oman’s Ministry of Finance to become the central scoring application in the country.
The government in Oman is now open to startups creating more disruptive applications with a wider-reaching audience. An existing partnership can be beneficial for both sides and support Oman’s vision for 2040.
On a national level, Oman seeks to promote the private sector and develop small and medium enterprises (SMEs). If you want to work with the government and apply for a government tender, head to the Omanuna portal, where you’ll find information on how the government awards projects above a particular value to companies. You can also learn about other eligibility criteria.
For a list of contact details of trade organisations in the country, click here to access the Omani Chamber and Commerce Industry’s directory of businesses.
Get the legal side right
Once you’ve found a partner, you’ll need to decide on the legal structure.
You can choose from three main types of partnership:
- General partnership
- Limited partnership
- Limited liability company
- Joint venture
These are relatively easy to set up. You don’t hold any requirements for liabilities since both partners have unlimited liabilities of the business. However, the legal structure provides very little protection for the partners.
There are two legal structures in a limited partnership:
- General partners whose liability to the partnership is shared (for example, joint liability).
- One partner is limited to a particular amount of liability respective to the capital contribution.
Due to the structure, no personal asset can be tied to the business. This is the type of business where the contribution of two partners varies in terms of time and finance.
Limited liability company (LLC)
This is where two or more partners have liabilities limited to the share in the capital of the company, and the most preferred form of business partnership.
This is an agreement between two or more natural juristic persons without affecting a third party and not subject to registration.
Partnership limits the liability and provides you with protection when things go wrong. Always get legal advice and whatever you decide, get it down on paper rather than relying on a verbal agreement.