Business ownership can lead to long hours and hard work, but if you put in the time and effort, the feeling of success, security and freedom and worth it.
You have had a business idea for a while but aren’t sure where to get started. What if you brought in a business partner? A partner would bring in another set of skills and may possess knowledge in areas that aren’t a strength of yours. A partner could help handle the responsibility, and you two could reap the benefits together.
Having a partner also brings adversity. You two will have to find common ground on numerous legal issues, work standards, office procedures, and employment protocols, among others.
Is a partnership the best option for your business, or should you go in alone? Consider the pros and cons below.
The pros of business partnerships
Extra hands and extra knowledge
A benefit of business partnerships is that you and your partner share the work – in all aspects of the business. There’s nothing wrong with that. In addition to the extra set of hands, a partner also supplies additional expertise. You may have a grip on many aspects of the business but aren’t so strong in other areas. New or improved approaches are, at least, worth considering.
Lower your financial investment
Starting a business is expensive. While it’s likely, you would get a small business loan to begin, that’s not the case for everybody. Also, operation and overhead costs don’t just go away once a business is up and running. A partner can help relieve some of that initial burden until the company provides some of the necessary profits to fund itself. This financial partnership will come in handy because while some businesses are profitable within six months or so, others can take years to turn a profit.
The cons of business partnerships
Disagreements and compromise
The first thing to understand is that compromise isn’t always a negative, but it is as it’s defined. For a compromise to be successful, both parties must concede. Compromises aren’t always enjoyable – sometimes you feel like you won, and sometimes you feel like you lost, but remember, its about the business. In the end, neither party won or lost – concessions were made, and a favorable outcome for both parties, and the business, came out on top.
Partners share profits and problems
In a partnership, if legal issues arise, you both have to face them. If the business is facing debt harassment and collection, you and your partner will have to face the music.
Sharing profit is both a pro and a con. If you and your partner respect each other, profit sharing shouldn’t be an issue, as you would likely enjoy seeing each other succeed. If tension arises between you and your partner, profit-sharing could become an issue.
Conclusion
When starting a business you have to weigh the options and decide what’s best for your situation. Another pro and con of a partnership is taxes. On one hand, partnerships avoid business entity taxes and file taxes individually. On the other hand, you file taxes separately and must pay taxes at a higher rate than you would as a solo business owner.