Among the many momentous decisions you face as a business owner, taking on a partner is one of the most important. A new business partner affects nearly every aspect of the business. While there are many good reasons to move into partnership, there are also cautions that should be considered. A new partnership should never be taken lightly. These Georgia business attorneys have extensive insight into what you need to understand before considering this type of step.
What Are the Potential Pros of Taking on a Business Partner?
There are several good reasons to take on a business partner, including:
- You no longer have to shoulder all the responsibilities, which gives you more support. It might also provide you with a better work/life balance.
- There’s an opportunity to bring in additional knowledge and experience, possibly in areas you aren’t well versed in. That, in turn, allows you to focus on the parts of the business you’re most interested in and suited for.
- New perspectives are available for various business decisions. Brainstorming is easier and more productive when there are more people involved.
- The cost of running the business can be shared rather than entirely yours.
- You might have more bandwidth to grow the business when there’s someone to share responsibilities with. It’s also possible that the partner will have connections you previously didn’t have access to.
- The new partner may be able to bring an influx of cash to the business.
What Are the Potential Cons of Taking on a Business Partner?
Just as there are several good reasons to consider taking on a business partner, there are also several good reasons to reconsider whether it’s a good idea.
- You lose some of the ownership and power.
- Decisions can be more difficult to make when there are more people involved in making them.
- While one pro is that business costs can be shared rather than solely yours, another thing that will be shared is business profits.
- At some point, there are likely to be disagreements. Those are not only stressful, but they can also be harmful to the business.
- Some partnerships are done on an informal basis with no paperwork involved. However, that can lead to problems if there are differences of opinion as to the terms of the partnership. Not having details in writing and signed by both parties can lead to headaches and legal woes down the line.
- The partner may cause liabilities to the business, which would partly become your responsibility.
- A time might come when one of the partners wants to sell the business, but the other
How Can I Determine if Someone Would Be a Good Business Partner For Me?
One of the best ways to learn if someone would be a good business partner for you is through extensive conversations on some potentially tricky topics. This person is potentially going to be your business “spouse” and should be treated as seriously as you’d treat someone you’re about to marry. Here are just a few of the questions that should be answered:
- What level of risk do you both have? How can you bridge that, so both parties feel comfortable if it’s different?
- What are each partner’s strengths and weaknesses? How will that work in the partnership?
- What does each person see as the business’s strengths and weaknesses?
- What does each person see as the future potential for the business?
- How will you handle conflict?
- How will responsibilities be divided?
- What’s each person’s communication style?
- What role would each partner prefer in the business?
- What is each person’s management style? Is one person better suited to supervising staff?
- How will the business’ assets and liabilities be divided?
- And perhaps most importantly: How well do we get along? Can we speak honestly with each other? Does one or both of us have tempers that have to be managed?
What Can I Do to Make a Business Partnership Successful?
There are several things you can do before entering a partnership to help it succeed. Having frank discussions on the above questions is a start. Here are some additional considerations.
Understand why you want a partner. Are you burned out? Doing too much? Need someone to help or an infusion of cash?
Determine what values are important to you in terms of the business. How do you define success? How much do you want to be involved? How do you want employees (if any) treated?
How will the partnership be structured? There are multiple ways to set up a partnership, each with pros and cons that depend on your specific situation. That’s one of the reasons that working with an experienced business attorney is recommended, as they can help you understand each type.
Do you know someone you think would be a good candidate? You don’t have to run a business together before. It could be someone you’ve worked with or had other dealings with that have demonstrated that you mesh well together as partners.
Prepare to be honest. If there are challenges ahead for the business or if you have some personal issues that could affect your performance or involvement, get those out on the table. The new partner needs to know upfront what they’re walking into, or they could feel betrayed–not a good way to start a partnership.
Georgia Business Attorneys Can Help Guide Your Partner Decision
Call us at 770-285-7785 to set up a free strategy session. Our experienced business attorneys can help you clarify your reasons for wanting or needing a partner, what kind of partner you need, how to identify potential candidates if you don’t already have someone in mind, and draw up the legal documents and contracts that will spell out all the details to make legal issues less likely down the line.