It can be difficult to know whether or not the time is right for you to take on a business partner. There are many benefits to doing so, but it isn’t always sunshine and rainbows. Business partnership has its drawbacks just like any other type of partnership. Taking on a partner before you or your business is ready can be a huge mistake. But how do you know if the time is right?
Some professionals claim the best time to take on a business partner is in the beginning. By doing so you can both start fresh, both be in on decision making from the very beginning, and build the business together. This can help avoid some of the common issues in partnerships where one partner disagrees with decisions made before they came on board, and the other feels they should have more say in certain matters because they have been around longer.
There is a Need for Balance
If there is a need for balance in your business, it may be time to take on a partner. This can be a need for balance in many different forms. Maybe you need a balance of knowledge. If you are a great business person, but not so creative, a creative partner could be a great asset. Maybe you are great with people but not so great in the running a business department. A partner with a knack for running a business could be very valuable. Whether the need is for balance in knowledge, education, talent, or just business and life, a partner can help you find it.
If taking on a partner makes good sense financially, it may be time. Sometimes a bank will be more willing to lend if there is a second person that is liable. Sometimes an investment by a partner is all it takes to get things off the ground. A partner can share liability as well as equity, and this can make a huge difference financially in the business as a whole.
You are Prepared for Partnership
If you are prepared for partnership, it may be time to take the leap. What does it take to be prepared? First, get a lawyer. You do not want to draw up a partnership agreement yourself. This is not the time for a handshake deal. There is too much at stake.
Also, you need to be clear about what your expectations are from a partner both immediately and going forward. Do you want a silent partner? Are you seeking funding only, or do you need expertise of some sort to help with the running of the business? You need to understand what your partner expects from the relationship as well.
Lastly, make sure you have an exit strategy. What would the eventual dissolution of the partnership look like? Even if that is not in the plan, an exit strategy agreed upon by both parties at the beginning can save a lot of trouble if the partnership ever comes to an end.
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