SHOULD YOU TAKE ON A PARTNER?

By Phil Holland, founder, www.myownbusiness.org

A question facing most all start-up entrepreneurs is whether to go into business alone or with a partner. This decision can be made easier by preparing a "for" and "against" list. Some of the reasons for a partnership include:

• There is safety in numbers. You have two heads instead of one to discuss issues and make decisions. In the words of Solomon:
• Two can accomplish more than twice as much as one. If one fails, the other pulls him up; but if a man falls when he is alone, he's in trouble. And one standing alone can be attacked and defeated, but two can stand back-to-back and conquer. Three is even better, for a triple-braided cord is not easily broken."
• You will not need to be at the business at all times. You will have someone else who will be there to share the load and permit you to take vacations and have sick time.
• You will also have a highly motivated co-worker, not just someone who is earning a pay check.
• Partners can contribute complementary skills.
• It may be necessary to have a partner to contribute capital and share the risk when things do not proceed as planned.

Some of the arguments against having a partner are:

• You will have to share the rewards if the business is successful.
• You will lose total control over the business, particularly if you and your partner have difficulty in making decisions.
• You will have to share the recognition that will come if the business is successful.
• A partner can be a disaster if his or her judgment is not good.
• You run the risk of a falling out and perhaps the necessity of one partner buying the other out if you do not get along.

A good partnership will require the partners to have some traits in common. It is important that they have similar work habits and business ethics. They should also have common objectives as to how the business will be run and grown. In other ways they should be different including the business skills they bring to the business. Complementary capabilities permit spreading the workload and provide better coverage for problems. Different capabilities also permit you to give each partner a veto over important decisions in his or her area of expertise to help maintain stability and eliminate conflicts.

Finally it would be important to have a buy-sell agreement in place, in the event of a disagreement, incapacitation or death of a partner. Such agreements are normally funded by term life insurance.

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