Should you pick a business partner or an investor?

Are you looking to finance your business? Are you wondering who between a partner and an investor is best for you?

First, understanding what the big difference between a partner and an investor is very important. These two can help finance your business whether you are starting or expanding your business. Even so, they play totally different roles in the business.

The major difference between an investor and a partner is their financing within the business. While a partner contributes as per the agreement, the investor in most cases puts in more of the finances. A partner shares in the losses, profits and business responsibilities, basically they are totally involved in running the business. However, an investor waits for returns on their investment to the business. Even in an event of losses, the business owner has to give returns as agreed with the investor.

The second difference is their involvement in the business activities. After giving their contribution to the business, investors are not involved elsewhere in the business operations apart from management decision making. However, a partner is a business owner too and they are as involved in the business as the business idea owner apart from the fact that they may have fewer shares and therefore lesser responsibilities.

The relationship between you as the business owner and the partner is based on trust, most partners are people you know and have shared experiences. Investors, on the other hand, are new people to you and they leave the responsibility of generating returns entirely to you.

Do you want someone who only adds value in terms of cash only or one who contributes more than money?  Before you decide how and who to finance your business, adequate research is important to understand the difference between investors and partners. With that information, it will be easy to identify who will be the best fit for your business.