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The attorneys of Daughtry, Woodard, Lawrence, & Starling

Should you consider bringing on a business partner?

On Behalf of | May 24, 2024 | Business Law

One question entrepreneurs often ask themselves is whether they should have a business partner. It’s a tough decision to make, with several pros and cons.

Having a partner is a choice that can profoundly impact your business’s trajectory. By exploring key considerations, you can decide if bringing on a partner is the right move for your business.

Benefits

One of the primary reasons to consider a partnership is the opportunity to combine complementary skills and expertise. A partner can bring strengths in areas where you lack experience or proficiency. 

Throughout your day, you are wearing multiple hats to meet all of the demands of running a business. Sharing responsibilities with a partner can alleviate some of the stress and workload.

Additionally, a partner can contribute additional financial resources, which can be crucial for growth and expansion. They may also bring valuable business connections, industry knowledge and access to new opportunities that will benefit your business.

Drawbacks

One of the most significant challenges of a partnership is the need to share control and make decisions collaboratively. Differences in vision, strategy or management style can lead to conflicts. 

Bringing on a partner also means sharing the business’s profits. However, this may be offset by the increased growth and success that a partner helps achieve.

In addition to shared profits, there is also shared financial and legal responsibility. If your partner makes a bad business decision or does something illegal, you might find yourself in jeopardy.

It’s crucial to research potential partners thoroughly. You will want to evaluate their experience, track record and reputation. Consider conducting background checks and speaking with previous business associates.

If you make the decision to bring on a partner, having a formal partnership agreement is vital. It should clearly define each partner’s roles and responsibilities. Furthermore, it should cover profit sharing, decision-making processes, dispute resolution and exit strategies to prevent misunderstandings.