It’s quite common these days for many businesses to use partnerships as a means to expand their business. This can of course be done in a number of ways through general, limited or limited liability agreements. Some business people choose to partner for different reasons whether that be for one-off projects where businesses join forces and assist one another in joint ventures or perhaps individuals with complementary expertise partner and create a business together.
While it might sound like common sense to enter into a partnership in order to grow your business, it’s not always advisable for everyone. There are so many reasons to advocate for and against partnerships and it’s important to know why. Partnerships really are a make or break agreement. Below are the pro’s and con’s that you should consider before making your all-important decision.
- Decisions Become Less Burdensome – Partnerships can be beneficial because you always have another equally qualified person there to help you make better informed business decisions. Having a trusted partner there to alleviate the stresses that these decisions can sometimes cause can be a great bonus by allowing you to share this responsibility, leading to a more positive experience in running your business.
- Wider Skillset – It’s common for people that have complementary skillsets to enter into a partnership because of the advantages it brings for one another. Say for instance you are a marketing whiz that’s great with clients and your partner is the numbers guy that’s great with statistical analysis and finance. Businesses really thrive in environments where there is a healthy dynamic between people with complementary skills rather than opening a business individually where you might lack certain skills that may be vital for success.
- Personal rivalries – If you’ve ever watched a reality TV show about it, or been put in the situation yourself where you and your friend or co-worker are put to the test and end up butting heads – you’ll know it happens all too often. Especially when it comes to business, where you each feel a strong sense of responsibility and ownership. Often, it’s a personality issue where two alpha’s with headstrong opinions will never work. Partnerships are all about compromise and unfortunately, that’s not always possible for some people. When choosing a partner, ensure your personalities are as complimentary as your skillset otherwise it’s best to walk away.
- Liability – Liability is typically set out in a legally binding partnership agreement. But sometimes, even determining the nuances of each section can lead to real contention. When you enter into a partnership, it will customarily mean that all liability is shared as equally as possible. Just as profit is divided equally and fairly, so will the losses. The issues will always lie in how these factors are divided. Imagine you were in a partnership and you were sued by a customer for malpractice after your partner behaved inappropriately. You would be directly affected. In business anything can happen, so it’s important to cover everything when drawing up your agreements. As mentioned above, if there are certain things you don’t agree on it might be best to walk away.