When it comes to business ownership, is it better to go it alone or team up with a partner (or partners)? While both options can lead to a profitable venture, they each have significant advantages and disadvantages. Ultimately, the decision will come down to your financial capability, risk tolerance, leadership style, and personal preference. In this article we take a closer look at both sides.
Pro: Bridging Gaps
While you likely have skills that are related to the business you are launching, you can’t be an expert in everything. Business owners are ultimately responsible for all aspects of the company and all related functions, from sales to accounting and everything in between. Undoubtedly, you’ll be stronger in some of those arenas than in others. A partnership can provide balance by merging your skills and strengths with someone whose expertise is in areas where you lack experience.
Pro: Raising Capital
Launching a new business requires a significant amount of financial resources. A partnership will alleviate some of the financial burden and divide it among all of the partners involved. Each partner may have access to investment connections who can help the business raise capital quicker and more easily than a sole proprietor can on her own.
Pro: Employing Different Perspectives
Partners don’t only bring different skill sets and expertise to the table. They also offer varied experiences and perspectives, which can prove helpful in growing a successful company. Diversity of thought and experience strengthens the company’s ability to solve problems, innovate, and make sound decisions.
Pro: Sharing the Strain and the Success
Entrepreneurship can be exhausting. It can be lonely. It can be stressful. It can also be incredibly rewarding and exhilarating. Having a business partner means someone else is intimately connected to the challenges and successes associated with the business. It means not having to make the difficult decisions alone. It also means someone else will be just as excited over the victories as you are.
Pro: Achieving Work-Life Balance
With a partner, there is someone else equally invested in the day-to-day operations of the company. Being able to split the responsibility of running a business makes it easier to take the personal time you need.
Pro: Tapping into a Bigger Network
Not only do you each bring a unique set of skills and strengths to the table, you also bring your own connections and networks. This means expanded business opportunities ranging from strategic business relationships to potential sales. Tapping into the networks of all partners means an exponential increase in possibilities.
Con: Diverging Opinions
As noted above, having a partner means sharing the responsibility of business decisions, which can certainly be an asset. However, there will be times when you and your partner(s) don’t agree on the appropriate course of action. Each partner needs to come into this endeavor with a willingness to communicate openly and to compromise. If you want to hold on to the right to make decisions independently, a partnership may not be the right choice for you.
Con: Losing Agility
Making joint decisions requires more thought and time than unilateral decisions. If you’re in the habit of making snap decisions and moving quickly, you’ll need to be prepared to adjust your process when entering into a partnership. Take the time at the start of this arrangement to create a system for discussing and reaching major business decisions. This also means deciding how you will handle stalemates when a consensus cannot be reached.
Con: Sharing the Wealth
Yes, you share the financial burden associated with business ownership. You also share the profits. When calculating your sales and profit projections, you must make sure that the potential of the business can support multiple partners.
Con: Selling the Business Can be Complicated
In the future, you may want to sell your business or your stake in it. A partnership can make this process more complicated. You can minimize some of the challenges by planning potential exit strategies now. Your partnership agreement can include clauses for “right of first refusal” or may spell out specific strategies if one partner is no longer able to work.
Pro: Consult a Pro!
Opting to pursue a partnership can be rewarding and it can be complicated. Before you enter into discussions with a potential partner, connect with a financial advisor who can help you assess the pros and cons connected to your business.