Thinking of Taking on a Business Partner? Read This First

Two heads are better than one, right?

In many cases taking on a partner can be the best thing you can do for your artisan business – after all, it brings a whole new realm of possibilities including fresh marketing and product ideas, networking connections and it can even lighten your work load.

But before you jump into establishing a business partnership you need to consider both the pros and cons.

Prepare More Creative Ideas – But Less Control

From creative standpoint, having a business partner is ideal for generating, and testing ideas.
“Art doesn’t do well in a vacuum,” says Matthew Jones, who co-owns the Ohio-based professional magician company, Shizzle Dizzle Magic, with his mother. “You need someone who's emotionally invested in what's happening to give you the truth. We all come up with ideas. Some of them are genius, other's not so much. A business partner is going to help you separate the two,” he says.

However, if you are used to making all the decisions yourself, remember that having a business partner means that you need to run all major decisions by your partner.

“This might be a tough pill to swallow for entrepreneurs who have strictly ‘gone it alone’ in the past,” Andrew Schrage, founder and editor at Money Crashers.com (www.moneycrashers.com) a small business and personal finance advice site. Beware if you enjoy the "control" aspect of running a business, he says, since “shedding some of this control may not be too comfortable for you.”

Sharing the Pain – and Gain

A business partner can be a relief for those who have been working alone for years. After all, solo entrepreneurship can be lonely. Sharing a businesses’ ups and downs can be a welcome relief.

However, when it comes to profits, you will also be sharing the gains. This might be difficult for those who are accustomed to reaping all the profits.

“I would recommend weighing the potential future business profits that a partner might generate versus your current revenues if you continue to run the business solo,” advises Schrage.
At the same time, taking on a business partner may very well bring on such increased revenues that any profit "split" will still result in higher profits for you than prior to the partnership, he notes.

Why Create a Partnership at All?

The number one reason for creating a business partner is to expand the capabilities of your business so that more value is created for the owners, says Eric Chen, who teaches business law and entrepreneurship at Saint Joseph College in West Hartford, Ct. “If this objective is not met, then the rationale for taking on partners is defeated,” he says.

For example, let’s say you are the creative genius behind designing fashion jewelry. Up until this point, you have been doing everything — soup to nuts — in running the business. This means that you are the bookkeeper, marketer, customer relations person, and more.

If you’d rather be designing than running the business part of your company, you may want to take on a partner with business skills. Looking at a partnership in this strategic manner, rather than taking on a partner who is a friend with exactly the same skill set as you, makes better business sense.

Don’t, Chen warns, base a partnership on friendship. “Many friendships are destroyed because of the strain the business partnership can create,” says Chen.

A Business Partnership is Like a Marriage

Be prepared for disagreements with your business partner; but what’s more important is not that you disagree, but how you resolve these bumps along the road. Chen says a business partnership is much like a marriage – and it takes hard work to make it successful. And, like a marriage, a “divorce” from a business partner can be traumatic.

“So first and foremost, you've got to get to know your prospective partner really well before making the jump,” says Chen. Knowing your partner isn't just hanging out socially he notes. It’s knowing everything about your partner from what his or her financial situation is to intimate family details.

“Going into partnership with a person who has a poor credit score and mounds of debt to repay places a huge financial burden on you. Partnerships can't be equal unless partners are on equal footing,” he says.

If your creative vision can't be realized alone, or if you believe you can create better art with another person, then do a partnership, concludes Jones.

“Partnerships work when you've got two people on the same page with the same vision. A partnership done well is a dream,” Jones says, adding: “A partnership done badly is your worst nightmare.”
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MARCIA PASSOS DUFFY (www.backporchpublishing.com) is a freelance business writer who works from her home in New Hampshire. Marcia’s articles have appeared on Yahoo Finance, CNBC, Bankrate.com, NFIB.com, Smart Business Magazine, The New York Times Lifewire, The Weather Channel, among others; she is the author of the book, Be Your Own Boss. Marcia wrote this feature article exclusively for Debbie May.com (www.DebbieMay.com), an organization dedicated to helping small businesses succeed.