Managing the affairs of your own company is not always easy, and many times the challenges associated with doing so will prompt you to wonder if having a business partner could help the situation. Whether you're thinking about founding a partnership from scratch or bringing a partner into a pre-existing business, the following list should help you weigh the advantages and disadvantages to make the most informed decision possible:
Pros of Having a Business Partner
- Brainstorming and Constructive Criticism – With a competent business partner to discuss ideas with you'll always have an outside source of input to rely on. Without that balance it can be easy to make mistakes or overlook issues that your partner may have noticed. The ability to bounce ideas back and forth and gain valuable opinions and recommendations from a business partner is one of the main advantages of going into business with someone else.
- Two Pockets, One Goal – When you found a company by yourself you'll be the only one responsible for ensuring that the business has adequate funding. This may require an initial investment from your own personal funds. With a business partner you can invest half as much and still have the same starting point. Furthermore, if difficulties are encountered later on you may be able to seek out joint loans or turn to your business partner in times of financial distress.
- Lighter Workload – Running a business with a partner is usually (but not always) a lot easier than managing one by yourself. Obviously, since there will be two people responsible for the affairs of the company you'll have a lighter workload, and when you need a break you'll have someone to turn to. In situations where your expertise does not match up to your partner's in a particular area, having a helping hand can certainly feel like a saving grace.
- More Flexible Hours – Some days you might not be able to work or circumstances may arise that affect your work hours. With a business partner you'll be able to schedule more frequent breaks for yourself without having to worry about the business going unmonitored. On the other hand, when you're operating a business independently there will be many days when you'll have no choice but to cater to the needs and concerns of your clients and customers.
- Synergy and Workflow – Some of the greatest inventions of our time have been conceptualised by two or more people. With the right business partner you'll find it much easier to get things done in a productive and stress-free manner. Whether your partner has the same level of control over the business or even if they're simply an assistant, it can't be denied that two people working together can create synergy and improve workflow.
Cons of Having a Business Partner
- Compromising and Cooperating – Collaboration is one of the most beneficial aspects of business partnership, but it can also be one of the greatest annoyances if you have difficulties cooperating or compromising with your partner. Eventually two minds are guaranteed to have a disagreement and when this happens it can seem as though having a business partner is more of a burden than a blessing.
- Splitting the Profits – Of course, one of the most obvious disadvantages of having a business partner is that you will have to give them a percentage of the profits. This goes without saying, but it can become frustrating if you start to feel as though your partner is not doing as much as work as you are but is receiving the same amount of pay. Splitting up dividends in a fair manner is a common predicament in business partnerships and one that is a leading cause of partnership dissolutions.
- Potential for Personal Controversy – Many business partnerships end in controversy and even family members or people who have been friends for a long time can be torn apart by the stresses associated with managing a company together. When you work with someone day in and day out there is a huge potential for there to be disagreements, and over time small differences and squabbles can build up and cause you to become distant from your business partner. Thus, before heading into business with someone it is important to ensure that your business goals and personalities are compatible.
- Sharing the Direction of the Business – Finally, with a business partner you may not have the freedom to direct the company in the manner you see fit. Since your partner will have their own finances and efforts tied into the business they will typically have an opinion on any major decisions and investments. After a while you may start to feel as though you'd rather have full control over your own business, especially if you don't agree with the direction your business partner is trying to take the company.
Keith Tully is a veteran insolvency practitioner and corporate debt management specialist with Real Business Rescue, the United Kingdom's most extensive and fastest-growing group of insolvency practitioners.