Are you considering the option of having a business partner? Do you know the pros and cons of business partnerships? What are the considerations or questions you should ask before entering a business partnership?
Having a business partner offers a lot of benefits, but choosing the wrong partner could get in the way of running your business properly and efficiently. Therefore, it’s important that you do your homework before entering in a partnership.
Before weighing out the possible pros and cons there are a couple questions you should ask yourself before you decide to take on a business partner.
Before entering a partnership, it would be best for you to first determine whether you are suitable for this type of arrangement. Do you prefer to do things alone? If your used to making decisions without consulting anyone else, you might have hard time sharing the decision-making of the business.
Before answering this question, you should determine what type of partner you will be.
A) Are you a work behind-the-scenes type of person?
B) Are you more of a hands-on day-to-day operations kind of person?
C) Do you want to equally share the responsibilities of running the business with your partner?
Now you can determine what type of business partner you need to complement your business skills.
When it comes to choosing a partner for a business it’s wise to select someone who brings something different to the table. You should focus on finding someone who complements your talents, skills and work ethic.
Shared Responsibilities: You’ll have someone to share the responsibilities and work needed to run your business.
Easy to Form: It’s been said that it could be the simplest and least expensive co-owned business arrangement to form.
More Capital: Partners share the costs to start-up the business. Which can result in having more capital to work with.
Shared Risk & Expenses: Partners share all the risks and expenses associated with your business.
Combined Skills: Partners bring unique individual skills to the table. When one partner lacks in a certain area, the other partner can bring the necessary skills and knowledge.
Support: Partners benefit from having mutual support for each other. They also can gain valuable insight and increased motivation from each other as well.
Liability: Partners in a general partnership are jointly and individually liable for the business activities and debts.
Shared Revenue: Some might see this as a negative. However, sharing the profits of the business in a partnership is the most common attribute. Remember, partners also share the costs and expenses.
Split Control: In a partnership, you will not have total control over the business. Business decisions are shared by both partners.
Your partner will represent you and the business: Having the wrong partner can negatively affect your reputation and cause havoc on your business.
First and foremost, you must trust the person. The role they play in the business will affect your work, expenses and ultimately your bottom line.
Great partnerships will have diverse talents and experience. Having different strengths and weaknesses will make for a better partnership because you will be able to fill in the gaps where one person is lacking.
It’s important to find out a potential partner’s financial status and commitments before getting into a venture together. Make certain that they are financially able to start the business. As with any new business, there are risks involved, so find out if your partner can endure those risks.
It’s important before entering in a partnership that you discuss your core values and vision for business success.
Your business partner's commitment must be equal to yours. If they're not as committed to the business and its success as you, it could be damaging to the brand, your bottom line and could be emotionally draining or stressful.
Partners don't have to spend the same amount of time working. What is important, is that you are on the same page and agree on what each person’s time commitment and roles are.
Author: Cheryl Hutchinson, Director of Franchise Administrations
JB Franchise Group, LLC