There are many things to think about when starting a business, and some people wonder if they should take on a partner. There are many benefits to having a business partner, but it is not necessarily the right move for everyone. For those who decide it is in the company’s best interest, there needs to be clear communication between the partners so there is not conflict at some point in the future.
According to the Chron, there are certain benefits to having a partner. If it is a startup, it is nice to have someone to brainstorm with about visions, marketing and growth plans. Owning a business takes a lot of skills, and it can be advantageous if a partner’s strengths balance the other’s weaknesses.
Many people partner up due to financial reasons. It decreases the investment burden, improves the company’s buying power and has a number of tax advantages.
The Wall Street Journal discusses that one of the biggest mistakes a business owner can make is to rush into a partnership without outlining ground rules and planning for the future. It is important to communicate at the beginning of the partnership and at regular intervals as the company grows. This includes discussing core values and what each person’s main role is going to be.
Whether the partner is a spouse, family member, friend or virtual stranger, it is imperative to create a written partnership agreement. The crucial areas to include are:
- Roles and responsibilities for daily operations
- Compensation for each partner
- Exit clauses in the event one wants out or is unable to contribute financially
Taking on a partner is best when the other person contributes vital skills, connections or financial resources that are essential for success. Otherwise, it may be better to go it alone and hire independent contractors or employees.