Should You Take on a Business Partner? The Pros and Cons

Deciding whether or not to take on a business partner can be a tough call for entrepreneurs. On one hand, having someone to share the workload with and bring fresh ideas to the table seems appealing. But you also have to consider the downsides, like giving up some control and splitting profits. In this insight, we’ll explore the main pros and cons of bringing on a business partner so you can make an informed decision.

Pro: More Time for Big Picture Planning

When you first started your business, you likely had big dreams about where you wanted to take it. But as you got caught up dealing with day-to-day crises, those ambitious plans probably fell by the wayside. Bringing on a partner allows you to share some of the grunt work, freeing up mental space to think more strategically about the future. With a partner overseeing critical tasks, you’ll finally have time to work “on” the business rather than just “in” it.

Pro: Access to Specialised Skills 

Does your business rely on expertise you simply don’t have? For example, many web design firms realised they needed to offer SEO services to stay competitive, but lacked those specialised skills in-house. Rather than endlessly try to teach themselves SEO or outsource it overseas, some solopreneurs decided to partner with an expert. That way, they gained a skilled SEO professional invested in their success. So if your business is missing a critical competency, joining forces with someone who has that knowledge can give you a competitive edge.

Pro: Shared Passion and Accountability

Running a business alone can be a solitary and sometimes demoralising endeavour. But bringing on a partner inserts a fresh burst of energy and enthusiasm into your company culture. After all, partners tend to be deeply invested in the business’s success since their personal reputation and finances are on the line too. That leads to higher motivation and accountability. And because you’ll be navigating challenges together, you’ll have someone to commiserate but also brainstorm solutions with. That type of camaraderie is invaluable.

Con: Loss of Full Control

Without a doubt, the toughest thing about having a partner is giving up sole decision-making authority. You’ll need to consult them on major choices and be willing to compromise. For some entrepreneurs accustomed to having full autonomy, that power sharing can be difficult to swallow at first. While it may chafe to have your ideas questioned or redirected by a partner, it’s important to remember the synergistic benefits they also bring to the table.

Con: The Risk of Disagreement

When two passionate, opinionated people team up, there’s always a risk of butting heads. You and your partner may strongly disagree on which new products to develop, whether to expand facilities, or even when to declare dividends. Without open communication and a shared vision, conflict can easily arise and relationships deteriorate. Personality clashes and contrasting work styles can also contribute to tensions flaring. So be very thoughtful about choosing someone you’re compatible with.

Con: The Burden of Share Profits 

Finally, taking on an equity partner means you’ll have to split future profits with them. For some solopreneurs accustomed to retaining all the earnings themselves, that financial sacrifice can be difficult to accept. And depending on how ownership stakes are divided up, your personal take-home percentage could be substantially reduced. However, having reliable help to increase sales and revenue can potentially offset and surpass any profits you must forego.

Should You Do It? Questions to Ask Yourself

As you weigh the pros and cons, here are some key questions to ask yourself:

• Are you struggling with an unmanageable workload? Do you need relief from some tasks?
• Is there an area of expertise missing from your skill set that’s holding your business back?
• Are you craving more accountability and motivational support?
• Are you comfortable relinquishing at least some control over decisions?
• Have you found someone trustworthy who shares your vision and has complementary strengths?

If you answered yes to most of those questions, then bringing on the right partner could give your business a game-changing boost. But don’t rush into any partnership without thoroughly vetting candidates first. And be clear on roles, responsibilities, ownership structure, and exit plans upfront to set the collaboration up for success.

With careful evaluation and planning, adding a business partner might be one of the best moves you make as an entrepreneur. The infusion of energy and ideas they bring could be just what you need to reach the next level. So be open to the possibility and thoughtfully assess whether it’s the right path forward.

For more information contact Ballards LLP at 01905 794 504

Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.