Two brains are better than one, or so they say. The thought of going into business with a colleague or associate might sound very attractive, and it’s far from uncommon in the world of business. However, the truth is it can end in disaster, so it’s not a decision that should be made lightly. Here, we’re going to look at what you need to consider before you agree to any joint ventures.
What are the benefits and drawbacks?
Before thinking about the specifics of the partnership, you need to think about the pros and cons of partnerships in general. The benefits are clear: whatever expertise your potential brings to the table is now yours. This could be connections in the industry, experience, accounting or legal skills, or other talents you just don’t have. What’s more, you could be sharing the costs, the responsibility, and the risks of running a business. But what are the drawbacks? Shared profits are one of them, but there’s also loss of control that comes with allowing a second voice in running the business. You are not the only business owner, so you aren’t able to and shouldn’t be making big decisions independently. What’s more, you are liable for your partner’s wrongdoings. If they were to skip out of town after racking up debt in the business, you are responsible for paying all of it, not just half.
Expectations, duties, and goals
Before making any agreement to get into business with someone else, make sure you are on the same page about absolutely everything you can confirm. What are their expectations and aims for the business? Do they see the company growing in the same direction and do they have the desire to provide the same kind of product or service as you do? In the day-to-day running of things, can you both agree who takes care of which responsibilities? You should do a little digging of your own to be certain that you can trust a partner that you don’t know too well. Services like a people search by Checkthem can highlight potential nasty surprises, such as court cases, debt, past history in the business. When it comes to something as potentially risky as going into business, taking someone’s words at face value isn’t always the safest strategy.
Get it binding
A handshake agreement isn’t enough, either. Getting the legal eagles involved might sound very serious, especially if it’s a friend you’re getting in business with. Without a partnership agreement drafted by experts like Priori Legal, however, it’s all too easy for the partnership to get very messy. You might not be certain who has control over what parts of the company. You might not be able to remove a partner who is disruptive to the business. You might even be forced to dissolve the company if a partner dies, is disabled, or goes bankrupt. Partnership agreements are there to ensure that the business keeps going in the direction it’s supposed to, no matter what happens with the actual partnership.
Partnerships can be hugely beneficial, there’s no doubt about that. But unless there’s honesty, personal cohesion, shared vision, and mutual benefits, it most likely won’t work out. Make sure you have all that before you set off on your collaborative efforts.