On the surface, the idea of a business partnership appears to have a lot going for it. Instead of attempting to do everything yourself, now there’s someone who can share the burden and make the venture a little less scary. Just look at the litany of successful, and sometimes earthshaking, business partnerships in recent times:
- Larry Page and Sergey Brin, Google
- Evan Williams and Biz Stone, Twitter
- Bill Gates and Paul Allen, Microsoft
- Bill Hewlett and Dave Packard, Hewlett-Packard
- Ben Cohen and Jerry Greenfield, Ben & Jerry’s
And in case you’re thinking, how can I compare a hypothetical partnership in my business with Google or Microsoft?, just remember these and most other wildly successful ventures started out in someone’s garage (or similarly unimpressive venues).
But before making a decision that will affect your business for years to come, here’s a look at key pros and cons of taking on a partner.
Business partnership advantages
As noted, an effective partnership means you’ve doubled your resources. When starting a business—or even scaling up for expansion—this entails considerable market research, revised sales strategies, connecting with and pitching to investors, additional research and development, etc. A lot more can get done with two people, rather than just one.
Other advantages include:
Diverse skill sets. It should go without saying, but you don’t want to have a partner who’s “just like you.” Seek out an individual whose strengths compensate for your weaknesses, and whose background has led to a diverse skill set that fills in the void where you may be lacking.
Different way of looking at things. A person with a different background will likely see business challenges in ways you wouldn’t have considered. Having an additional (and knowledgeable) perspective can help with deciding whether to invest capital in a business plan or find some other, more profitable way of leveraging precious resources.
Greater accountability. A solo entrepreneur typically has no one to answer to—an appealing factor for geniuses and visionaries, but less effective for the rest of us. A business partner with an acute sense of what works and what doesn’t will hold you accountable for decisions made, which will keep you focused and productive.
Bringing on a partner only works if there’s mutual respect and a commitment to work through disagreements. “A business partnership is a lot like a marriage, and as we all know, not all marriages last forever,” notes Steve Strauss at USA Today. With all the time partners spend together, you had “better be sure you can get along for the long haul.”
Business partnership disadvantages
Disagreements on strategy, hiring, marketing, etc. If your business partner is as strong-willed as you are, it’s a good bet there will be heated disagreements on company priorities, budgets, hiring and so on. That can result in significant amounts of time better spent elsewhere.
Shared profits. Business partnerships are often, though not exclusively, framed as 50-50 profit-sharing arrangements. Whatever agreement you strike (and in this area, you absolutely must get the agreement in writing), some share of the company’s profits won’t be going to you.
Clashing work ethics. Let’s say you’re a proponent of working round-the-clock on your business. A partner may not have the same passion and drive, choosing instead to exert his or her energy when it best suits them. (Or the pattern might be reversed.) In any case, important things like meeting deadlines or following up with clients, can get lost in the shuffle.
Risk and liability. While you would never take actions that compromise your integrity, there’s no guarantee a business partner will see things the same way. With a partnership, any violation of laws or regulations becomes your responsibility as well. A poor or impulsive decision made by your partner could result in both of you ending up in court and/or liable for damages.
Clearly, many factors must be considered before embarking on a partnership. But if you do take the plunge, says business coach Brad Sugars, “the decision of who is responsible for day-to-day company direction needs to be made early on, and everyone in the partnership needs to be 100 percent clear on their roles, duties, and responsibilities.”
This works only if both partners pledge to maintain open and consistent communications.