Are You Thinking About Taking on a Business Partner?
When thinking about your business and the needs that come with it, having a business partner might cross your mind for a time or two. Business partners can be highly beneficial when starting a new company or organization. There are both pros and cons to having an extra set of eyes to help with the process of starting up your new business.
This experience can be both rewarding and nerve-wracking. It’s essential to ensure your business partner is someone you can trust and would feel comfortable having on board for starting your company or organization. By reviewing the pros and cons of taking on a business partner, you can process both sides of the information before making an informed decision.
Here are 3 advantages and disadvantages of taking on a business partner for your company’s needs:
Pro #1. Benefiting From Additional Knowledge
We all know the power of numbers. One of the first advantages of having an additional partner in business is that you will benefit from gaining further knowledge from the other person. Working with more than one person can help with the planning and idea stages. You can collaborate faster and produce better results and productions for your growing business and organization. It’s important to note that by working collaboratively, you are not only able to acquire more knowledge but able to experience other cultures and deciding factors from additional points of view other than your own. This is important when considering your business’s targeted audience and how your organization may affect them.
Con #1. Unable to Make Decisions on Your Own
However, since bringing on a partnership, you cannot make your own decisions. We know this is a significant deciding factor when considering bringing on a partner in business. Sometimes, we like to call all the shots all the time. There’s nothing wrong with that. However, you should note that having a partnership agreement that a lawyer has not vetted could contain potential errors that could lead to financial and legal consequences. You should make sure a business lawyer reviews your business partnership agreement to prevent the possibility of legal implications down the line.
Pro #2. Having an Extra Set of Hands
When those long days hit, you’ll wish you had some extra help to take the pressure off. Another pro of having a business partner is having an extra set of hands on deck. Life gets in the way for all of us, and sometimes, we may need someone to cover for us. A child gets sick, a spouse needs care, and the cycle continues. It happens in all of our lives. A business partner can help manage the additional stress of running a business alone. Not only that, but sometimes it’s helpful to split up the workload so you can maintain proper mental and emotional health.
Con #2. Potential Liabilities
A downside to having an additional set of hands is the exposure to potential liabilities. You want to ensure that whoever you take on as a business partner is reliable, trustworthy, and dependent. Having an additional partnership could open your business to a world of potential liabilities and consequences. By having team meetings and establishing boundaries, your partnership can have a smooth transition and a positive, lasting business impact.
Pro #3. Having Less Financial Burdens
On the contrary, splitting into partnerships can equal a less financial burden. When you have one or more business partners actively contributing to the business, your financial needs will be split so that each partner will cover each of their parts. This can result in less of a financial burden for yourself and more of an evenly cost split between business needs, extra supplies, and additional charges. In the long run, this can be highly beneficial in case the business is not bringing in as much projected income, and you have the possibility of not suffering financially. This can be helpful when paying for more supplies or business needs like inventory and products.
Con #3. Splitting the Profits
When you’re splitting the business, you’re also splitting the profits. Another downside to having a business partner is that your funds will automatically be split. Any profit the business makes will have to get broken into some sort of a divide. Usually, this means a 50/50 split, but in some cases, it could be a 60/40 or even a 70/30, depending on the business partnership agreement. Whatever the percentage split is, your profits will always be divided between you and your partner(s). This is important to consider when considering taking on a business partner and tracking the success and income of your business. Splitting the profits could pose a problem if you need more income but must split the profits due to your business partnership agreement.
What We Think You Should Do
When considering taking on a business partner, reviewing the pros and cons and performing additional research when looking at your business is essential. When making this critical decision, it’s crucial to consider the income, the targeted audience, and your projected business supply and demand. A Daytona-based business lawyer can make your business planning needs more organized and structured.
You’ve Got a Partner in Lankford Law Firm
Debating on getting a business partner can be a very stressful time, yet crucial for your business and organization’s success. A sound partnership agreement and reviewing these documents with a business lawyer can make the partnership process much more manageable. To learn more about business partnerships and review your company’s needs, reach out to a business lawyer at Lankford Law Firm today by calling 850-264-7004 or fill out an online form.