5 Reasons Why You Should Reconsider Having a Business Partner
When you have a business partner while starting up a business, things get way easier. You get access to ideas, better growth opportunities, more capital and someone to share responsibilities with. Despite all these benefits, things get pretty messed up at times. A business partnership is just like an odd love story that starts with perfection, warm fuzzy feelings and lots of affection. Later the relationship ends in divorce.
Usually, a business partnership begins with a gut feeling that includes little planning and few ground rules. Soon the partner discovers the hard way that what is left unplanned often leads to expectations that are not met, annoyance and frustration. There are a number of things that partners can clash on, that might be the work ethics, financial goals and other conflicts.
There are a number of reasons why a partnership explodes, but, before going any further I need to tell you what is a business partnership and how does it work.
According to Google, a partnership is an arrangement in which two or more individuals share the profits and liabilities of a business venture. Various arrangements are possible: all partners might share liabilities and profits equally, or some partners may have limited liability.
Before starting any partnership business, you need to ask yourself the most important question: Is it necessary to have a business partner to form a successful business? When you get the answer then take a look at the following points and then make a decision.
Is it just because of the funding?
Many people opt for partnership business when they are running out of funds. If this is the only reason to consider such business, you need to stop right away! Think hard enough and come up with some other way to find money. While a partner may have a lot of cash that he’s willing to invest, it may not be a good idea in the long-term. Search for other ways of getting money. You can take a loan from the bank or even from a friend and then pay it back later with interest.
There might be a difference in goals
There is a minimum chance that your goal will match the goals of your partner. For instance, you are aiming for the long-term goal of launching a successful business, whilst your partner may be aiming for additional money to supplement their existing income. This is entirely opposite foundation of partnership which needs to be fixed before entering into a partnership. The consequences can be devastating that can trigger arguments, weaken business growth and cause conflicts in friendship.
Profit will be divided equally
Regardless to how much time and energy you have devoted to the business, you have to share the profit equally. Profit sharing leads to inconsistency where partners are not working equally and the fair share of effort is unequal, but still reaping the rewards.
Friends/family business ventures lack expertise
Every business, big or small, must have people of expertise in areas like finance, management, production, human resource and sales. A carefully selected business partner can bring lots of considerable expertise to the venture. But if you are partners with a friend or a family member, you need to compromise as there is a limited share of impartiality. By sacrificing this knowledge, you could enter the market with lots of hindrances and without the necessary tools to succeed.
Defined business roles are difficult to create
Friendship is a result of mutual affection that means that it is formed organically and has no fixed roles of structural hierarchies. But this cannot happen in a business partnership, which is constructed to include individual roles and responsibilities. At least one partner needs to take the authority of the business where he has to play the leading role, which may eventually create conflicts in the friendship.