Taking On A Business Partner

Nov. 25, 2009 - PRLog -- It can be lonely at the top. Fortunately, there’s always room for some company.

If you’re tired of going it alone, it may be time to take on a business partner.

The advantages of partnerships include:

• They’re easy to form.
• It’s easier to attract capital for a business operating under a partnership than it is for a sole proprietorship.
• Partnerships make expansion and other related opportunities easier.
• They spread the work burden.

Disadvantages include:

• It may be hard to find a suitable partner.
• Disagreements among partners could jeopardize the business.
• It may be difficult to buy out a partner, should the relationship go sour.
• One of the partners must assume unlimited liability.
• You have to share in the business profits.

The key to a good partnership is finding somebody whose strengths complement your own. Ideally, your partner has at least three years experience in the field and is someone you know personally. Your personal and business philosophies should also mesh. It can be difficult enough to run a business jointly; you don’t want to be doing it with someone whose ideas and opinions differ radically from yours.

When hashing out the legalities of the partnership, determine the roles of each party and put them in writing. These job roles should be written to capitalize on individual strengths and minimize weaknesses. Avoid potential conflict by keeping each partner’s job responsibilities as separate as possible.

You’ll probably want to designate one of the partners as the main point person for customer, employee and vendor contact. However, the other partner should maintain a public presence as well so others will feel comfortable dealing with him or her. Therefore, it’s important that the partner you choose have good interpersonal skills.

Both parties should bring the same amount to the business, both financially and in skills and talents. If not, the partners’ share in the business should reflect the disparity.

The partners should also draft a well thought-out mission statement for the business as well as an agreement stipulating how the business will be divided, how the profits will be shared, and how the partnership will be dissolved.
The agreement may also include:

• How the losses will be divided
• Where the business will be located
• The duration of the partnership, either number of years or “until dissolved.”
• The capital contribution of each partner.
• Method of liquidating the interest of a deceased or retiring partner
• Whether the surviving partner may continue using the name of a deceased partner.
• How disputes will be settled.

It’s important to keep an open line of communication with your partner. There are even therapists who will work with business partners. But if you find that the arrangement isn’t working out, think about how buying-out your partner will affect your livelihood.

To determine whether a partnership is right for you, ask yourself the following questions:

• Are you controlling?
• Do you need to make all the decisions?
• Is it difficult for you to delegate?

If you answered yes to any of these questions, you may be better off going it alone. Carefully weigh the advantages against the disadvantages of taking on a business partner. In the end, what’s best for your business is probably what’s best for you.

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