Should I Partner with a Cofounder When Thinking of Opening My Own Small Business?

Many new business owners wrestle with the decision as to whether they should partner with a business partner. While having a business partner can be great strategically, it can also cause many disagreements that can be detrimental to your business. When you are embarking upon the important decision as to whether working with a business partner is the right decision, it is important that you consult the information below to help guide you to the best possible decision for your business.

Pros to Including a Partner in Your Business 

Additional Capital: Deciding to have a business partner can greatly reduce your startup and overall investment costs in your business. This is a serious value to consider because for an individual that does not have strong credit and has no business history can face major challenges when trying to obtain the required funding to start their own business. Having a business partner lowers the financial risk and increases the opportunity for funding when the partnership commences.

Less Risk: Starting a business always has risks. If you own a business alone, the entire burden is on your shoulders alone. Having a business partner enables more investment, which also reduces your potential for loss should the business fail, or a business loan will need to be repaid. It is important before you decide to get a business partner to conduct a comprehensive risk assessment to see the potential benefits you would receive by taking on a business partner. This will make it clear to you whether it is worthwhile to have a business partner.

Shared Workload: Another benefit to having a business partner is that two minds are better than one. Two perspectives and two sets of hands can help to get the business going at a faster rate. A business partner that has expertise that you are lacking has the potential to be a great addition to your business. At the beginning, you may not have many employees, which is why having a co-owner that has a different expertise than your own could prove to be quite valuable.

Cons to Including a Partner in Your Business

Conflicting Business Styles: Conflicting Business Styles is one of the primary causes of failed business partnership agreements. If you do not agree on which values are important in your company, then having a business partner could prove challenge. Priorities in terms of where money should be invested is another issue that is a major con to having a business partner that is not like-minded to your business philosophy.

Shared Profits: Even though you have less risk by having a business partner, you will also make less income. Even once you make the business profitable, you will still have to split the profits in two, which could end up being a substantial amount of capital. You have to be sure that your business partner brings sufficient value to your organization to justify their 50% in profits. If the answer is yes, then it is wise that you consider further bringing them on as a business partner for your business.

Disagreements: A major drawback to having a business partner is the potential disagreements that can arise during the course of your business.

Bad bosses Disagreements can occur due to a variety of events. Disagreements will also be an issue when you are learning more about your business partner than you did upon starting to do business with them. For this reason, it is important to be extra careful when you are deciding who you are going into business with. If you chose incorrectly, it could end up being a very costly process for you to remove yourself from the partnership with legal fees and lost principal investment.

Be sure you are analyzing all relevant factors when deciding whether an individual will be an ideal fit both for the short and long-term vision that you have for your company.

Concluding Remarks on the Subject

 It is a very controversial issue to decide whether it is a wise decision to bring a business partner into your company. It is important that you assess their value and risk just like you would a business opportunity. If they compliment your operation in the expertise that you are lacking, then they may be a positive addition. That said, if they are more trouble than they are worth, you will end up losing potential profits and/or legal fees to settle disputes in the future. Carefully considering these benefits and detriments is wise and should be decided on a case by case basis when contemplating whether having a business partner is the ideal fit for your company’s ultimate success. If you chose the right business partner, you will be able to have a long and fruitful relationship that could last for a substantial period of time with a great deal of financial success.