Being a solo-entrepreneur can be a lonely journey, but is that a good enough reason to get a business partner? Here are some pros and cons to consider.
One of the things that most start-up entrepreneurs complain about is the loneliness that they experience. In a corporate you are surrounded by people who you can ‘run it through’ when you need to make a decision or ‘brainstorm’ to get a collective idea up and running. As a start-up, you’re pretty much on your own and entrepreneurs can end up feeling like they have been abandoned on a desert island by themselves.
But, is this a reason to get into partnership with someone else? Let’s break it down and have a look at some of the pros and cons.
Pros
1.Having an associate and support system.
As a business owner, every decision, every result, every success or failure rests squarely on your shoulders. Also, if you have staff, you feel responsible for their livelihood. This can over time take its toll on your mental state, unless you are disciplined and manage it well. Having a like-minded business partner who has the same core values as you, who shares the burden of responsibility, supports your decisions and the hard choices, is an absolute God-send. Be warned though, they will need to care about the company as much as you do and put in the same amount of effort as you do.
2. You benefit from having an additional knowledge and skill set.
Partners can often bring huge value to the business in terms of their skill set and their knowledge. They may have a huge amount of business experience that you do not have, even if they don’t share the product or service knowledge that you perhaps have. It’s never a good idea to bring someone in who has the exact same skill-set as you, another ‘mini-me’ if you will. You need someone who has the opposite of you, someone whose strength is your weaknesses and visa-versa.
3. You share the financial burden.
Bringing in a partner that ‘buys in’ financially is always a great asset. Starting a business can be really expensive, especially if you are selling a product or manufacturing one. The cost of inventory, equipment, retail and office space can be astronomical and having someone to share the burden is ideal. The additional finance that a partner brings in may mean that some of the requirements can be paid upfront, ensuring that you avoid huge amounts of debt.
Now let’s have a look at the other side of the coin:
Cons of having a business partner
1. Giving up ownership, power and control.
This is probably one of the most difficult things to do. Many entrepreneurs love to be in control and are quite happy to carry the accountability and responsibility of their own actions (or non-actions for that matter). Taking responsibility for somebody else’s mistakes or misdeeds is a pill that most find very difficult to swallow. It’s therefore of the utmost importance to have someone who is like-minded, transparent, and has the same ethical beliefs than you. This is often a unique combination that is quite difficult to find.
2. You have to split the profits.
As much as it was wonderful to find someone who was willing to ‘buy in’ to the business as a partner, they also deserve to get a share of the profits. This can be trying, especially in the beginning when there is very little profit and you seem to be putting more and more of your own money into the business. When there is a breakdown in the partnership, the money (or the lack thereof) is often what causes the rift. So you need to be absolutely clear on financial matters and agree to all the terms and conditions upfront, before it gets emotional.
3. You won’t always agree.
Having a partner means that you will no longer be able to make the important decisions on your own and this of course inevitably means that there will be disagreements. Conflict management between partners is huge and you will both have to find a way to get through it, else it may cause the partnership to be dissolved. It’s is always better to disagree and argue the decision than to get personal and emotional. There has to be some sort of give and take in any relationship, and this is never more true than in a partnership, especially if the business is not performing as expected. Emotions need to be kept in check and logic must prevail.
Plan from the start
To some extent partnerships are like a marriage, which is why it is never a good idea to enter into it without any kind of document and agreements in place. Make sure that everything around the ‘financial’ angle is clearly documented, so that if (or when) things go wrong, there is no need to get emotional about it. This should include things like salary, bonuses, expenses, how to split the profits, etc.
It should also clearly outline every partner’s responsibilities in the business, so that you can both get on with your individual tasks and roles without undermining or micro-managing your partner. No-one likes to work with someone hanging over their shoulder all the time.
Finally, make sure that there is an exit clause so that if things don’t work out, you can part ways amicably and without damaging both the business and each other.
