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Choosing a Business Partner – Yes or No?

Choosing a Business Partner – Yes or No?
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Simon Chapman - The Alternative Board by Simon Chapman - The Alternative Board
Managing Director (Mid and North Kent) - The Alternative Board

18 Jul 2017

At some point in their careers, nearly all business owners and entrepreneurs will have to make a decision as to whether to bring in a business partner or not.  CapitalSpace business development expert, Simon Chapman, talks you through how to weigh up the pros and cons. 

Initially there appears to be a lot going for it: no longer do you have to be alone and do everything yourself – you can share the burden and even the anxieties of running a business.  There have been many successful business partnerships over the years, some of which have started from very humble beginnings, even a garage:

  • Larry Page and Sergey Brin of Google
  • Bill Gates and Paul Allen of Microsoft
  • Bill Hewlett and Dave Packard of Hewlett-Packard

Bringing in a partner is a decision that will affect you and your business for years to come, so below I’ve listed some of the pros and cons of taking that decision.

Advantages

Double resources

By bringing in a partner you effectively double your resources.  Quite often, when starting up a business or developing expansionary plans, you have to put your own resources into market research, sales strategies, relationships with investors, research and development etc.  Put simply, you can do so much more with two people than just one.

Diverse skill sets

When looking for a partner try to find one that isn’t ‘just like you’. Seek out an individual whose background brings different skill sets that dovetails with yours and compensate for any weaknesses.

An alternative view

Coming from a different background, they are likely to see business challenges in a way you might not have considered.  Having an additional and knowledgeable perspective will help you develop and put in place those strategic decisions laid out in your business plan.

Accountability

Most solo entrepreneurs have no one to answer to; many of them they like it that way.  However, a business partner with an acute sense of what works within the business – and what doesn’t – will be there to help deliver accountability for decisions, keeping you focused and productive.

Making it work

Bringing in a partner only works if there is mutual respect and an understanding of how to resolve disagreements. As Steve Strauss, from USA Today, said: “A business partnership is a lot like a marriage, and as we all know, not all marriages last forever.”  In view of how much time partners work together, you had “better be sure you can get along for the long haul.”

Disadvantages

Disagreements on strategy

There could be heated disagreements on recruiting, marketing, investment and more if your partner is as strong willed as you are; this time would be better spent elsewhere.

Profit Sharing

Some form of profit sharing agreement will be put in place, usually 50-50 but not always. Whatever is agreed, you must get it down in writing! With a partner on board comes the acknowledgement that some portion of the company’s profits will not be going to you.

Clashing work ethics

Your passion and drive to ensure the business succeeds may mean you work around the clock, whereas a partner may choose to focus their time and energy within the business when it suits them (or vice-versa). If this is the case, then important matters such as following up with clients or meeting deadlines can get lost in the muddle.

Risk and liability

Whilst you maintain integrity with all the actions that you take within the business, there’s no guarantee that a partner will see things the same way.  A bad or impulsive decision taken by your partner could lead to a violation of laws and regulations, something that could see you both ending up in court.

Clearly, there are many factors that need to be considered before embarking on a partnership.  But if you go down this route, you need to be absolutely clear on who is responsible for the day-to-day decision making and have full understanding of each other’s roles and responsibilities.  Above all, a partnership will only work as long as you have open and ongoing communications.

To find out how Capital Space business premises could benefit your growing business,  call 0800 107 3667

MEET THE EXPERT 

Simon Chapman – The Alternative Board

Simon’s passion for helping the owners of small- and medium-sized businesses succeed led him to become the local owner for The Alternative Board (TAB) in Mid and North Kent.  Having held senior positions within the Fund Management and Banking Industries, Simon has wide expertise in devising and implementing strategies with business owners and their management teams. It is this insight and knowledge gained over the past 20 years that Simon looks to share amongst forward thinking business owners to help them strive.