Should You Start Your Business With a Partner?
As is the case with all business decisions, creating a partnership comes with various costs and benefits. The best business partnerships will be able to evenly distribute work, divide profits in a fair way, and quickly establish effective communication methods. Some partners, on the other hand, may find themselves quickly running into problems. In this post, we’ll discuss some of the pros and cons of creating a business with a partner, so that you can determine if this is the right structure for you.
The Pros and Cons of Starting a Business with a Partner
Pro: You Can Split the Workload
Starting a new business typically requires a tremendous amount of work. In the early stages of creating a business, there’s considerable paperwork, phone calls, and decisions that’ll need to be made. Having a partner to split these tasks with can help you lessen the burden and ensure that nothing is forgotten.
In addition, once your business is open and ready for customers, it’ll still be helpful to have somebody to divide the workload with. This is one of the many reasons why, according to the Tax Foundation, there are currently more than 2 million partnerships operating in the United States.
Con: Disagreements Will Happen
Although having a partner will help ease the burden of running your business, it also may create an additional set of problems. Going into your partnership, it’s important to recognize that you and your partner simply won’t agree on everything. Whether you’re discussing your business name, logo, location, or even the specific products or services you’re selling, being willing to communicate and compromise will be very important along the way. If you want to independently make all the decisions, then a partnership probably isn’t right for you.
Pro: You Can Divide Tasks by Areas of Specialty
Every entrepreneur has some areas that they’re better at than others. Due to this, having a business partner who has different than you do can make it significantly easier to cover all your bases.
There are numerous ways that you and your business partner can divide your responsibilities. You may want to consider having one person focus on big picture concepts (CEO) while the other one handles finances and accounting obligations (CFO). Before taking on a business partner, you should think about what the other person has to offer that you’re currently lacking. If you can find someone who can bring different skills to the table, having their expertise could make your business more successful than if you handled it all on your own.
Con: Dividing Profits and Ownership Can Get Tricky
Many partnerships start off well, but eventually become combative once topics such as profits and ownership need to be discussed. There are several methods for dividing profits including by the amount of hours that you work, the amount of capital you initially contributed, and the amount of revenue that you generate for your company. The way that you divide these areas will depend on the unique dynamics of your business, but this is certainly something that should be discussed before you open your doors.
Pro: There Will Be Multiple Perspectives On Big Decisions
As stated, there are many big decisions that you’ business will need to make. Even if you have a very idea of what you want your business to look like, it can be very easy to get “tunnel vision” and overlook some of the more important details.
Having a business partner can help you gain a new perspective on what decisions may be right for your business. There may be an obvious source of conflict (legal, marketing, tech, etc.) that could get ignored without an additional set of eyes. Additionally, having someone else involved in the process can help you both feel much more confident in your final decisions.
Con: Decision-Making Processes Could Take Longer
One of the biggest benefits of running a sole proprietorship is that you gain the ability to act very quickly. Without needing to confirm or get approval from their partners, sole proprietors can make the decisions they want, without having to ask another person for their input. While having a partner certainly affords you the benefit of a new perspective, needing to wait for approval on certain things may hinder your ability to make swift decisions.
Conclusion: Partnerships Can Be Beneficial, But They Aren’t for Everyone
Clearly, there are many pros and cons of starting a new business with a partner. The choice that is right for you will depend on your business’ long-term goals and overarching objectives. Before selecting a business model, you should explore all the available options. By rushing into a partnership that you aren’t sure of, you could risk having to cut ties in the future. This could lead to issues for your business, including having to buy out your partner, get bought out by them, or terminate the business completely.
If you have tips for starting a business partnership, share them with us in the comment section below!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.