Pros And Cons Of A Business Partnership
The idea to take on a business partner should never be considered lightly. While there are many obvious advantages, there are challenges to think about as well. And the best way to make this decision is by objectively weighing the pros and cons of a business partnership. But this is what the following comparison is all about. In light of saving you time, the following list will explore the good and bad of taking on a partner for your business.
Something To Keep In Mind
Before getting into the comparison, take note that partnerships do not always have to be equal. You can still hold a majority of the shares and control. However, it does change the way you need to operate in order to keep the partnership going. With this in mind, let’s move on to the details.
The Pros of a Business Partnership
- You Take Less Financial Risk:
One of the most obvious benefits has to be the financial boost you get. Whether the person is buying into your company, or you choose to start a venture together, you are taking some pressure away from your financial responsibility. And even though you do not want to think about it right now, if the business model doesn’t work out, you won’t take such a heavy hit. There is simply no getting around the fact that capital is very important to maintain a business. Especially during the initial stages. However, financial support should not be the determining factor. While it is crucial, there are other methods to legally create a budget.
- More Creative Power And Ideas
The old saying that two heads are better than one rings true in the business world. Because having a different perspective and take on situations can help tremendously down the line. More importantly, it can prevent the business model or structure from stagnating. Of course, a lot depends on the type of partnership you settle on. For example, you can stay in charge of all ideas by getting a silent partner. But never underestimate having someone to brainstorm ideas with; someone with the same interests to reach success. Some of the best ideas can come out of nowhere, but it usually needs a spark of some kind, which is why partnerships can be so great for business.
- Better Position To Grow The Business
Nobody is going to influence the growth of your business more than you do. It is your determination that ultimately determines how far you get. But it is impossible to be everywhere at once. And if you overexert yourself, you are bound to hit a wall or ceiling. Having a business partner can make things a lot easier. Seeing as they can attend meetings and promote the business too, it basically puts you in two places at once. You will also get more time to take care of yourself. Because you are no good to your business if you are constantly tired and borderline depressed. A partner can help with several important responsibilities.
- Greater Opportunities Through Partnership Connections
There are cases when partnerships can lead to influential connections. For instance, if your business partner is well-known by his or her peers and they hold a strong reputation, it can automatically open up opportunities that will be much harder to create alone. And if they don’t have a reputation yet, the relationships they build down the line can turn out to be very valuable for the company.
- Increased Credibility
It sounds rather superficial, but having two or more minds following the same direction establishes a degree of credibility. In other words, it is easier to sell an idea if you have a partner in your corner. Consumers and clients are more likely to take you seriously.
- Added Skills
Every person is blessed with certain skills and talents. But do you have all the skills and talents necessary to run a business alone? Maybe you are great with numbers and coming up with original ideas. But do you have enough marketing skills to create the necessary exposure? A partnership could just be what you need to replace the possible weak links in your current business. The skills a partner brings to the table can also make a huge difference.
The Cons Of A Business Partnership:
- You Have To Learn To Compromise
As great as two minds can work together, you will no doubt run into situations where you disagree. This is pretty common and should definitely be expected. But this is where compromising has to come in. Yes, one of the cons of a business partnership involves compromising when you cannot see eye to eye. The question is whether you are willing to be open-minded? Because that is what a productive partnership is all about.
- Profits Have To Be Shared
There is no denying that sharing profits is a tough part of a partnership. But it has to be done if the partnership has any hope of lasting. And depending on the shares they own, your partners have to be compensated if you want to see any money yourself. Now, if you are just starting a company, do not be too hasty to sell shares just yet.
- Big Decisions Need To Be Discussed
Everyone knows that a perk for being the boss involves making all the big decisions. Whether the decisions are productive or not, you do not have to answer to anyone but yourself if the project fails. More importantly, you do not have to consult with anyone before you make a decision – if you are the sole owner. A partnership, on the other hand, will force you to consult with your partner first when certain decisions have to be made. So, if you are leaning towards this option, make sure you can work with this specific compromise.
- Possible Conflict Of Interest
It does not happen very often, but it is a possibility that a conflict of interest may surface. And there are many ways it can unfold. For example, if your partner is invested in competing companies too, it could lead to questions about their loyalty. But this is just one way of how a conflict of interest can come about and it helps to be vigilant. Especially after investing so much into the business already.
- The Increase Of Unexpected Risks
Whether you go into a partnership with your best friend or with a complete stranger, there will always be external risks. Sure, the partnership helps a lot with the financial aspects. But if your partner is not respected or liked, or they have a habit of making things personal, it can eventually taint the reputation of the business. Thus, try to avoid any nasty future surprises by researching your partner beforehand. The last thing you need is a completely unrelated scandal to damage the business.
Some Advice Before Making Any Partnerships
- Make sure you are open-minded enough to let the partnership work
- Research your partner beforehand
- Discuss all the details before anything gets finalized
- Establish how much of the business you are willing to share
At the end of the day, you can do everything in your power to make sure your partner will add to the growth of the company, but nobody can predict the future. As with every choice you make in the business world, a certain degree of risk will always be involved. All you can do is maximize the odds of making the partnership work.