This article is provided courtesy of LLC.NET the LLC Specialist.

Explore the Partnership Option

Independent people want to work for themselves, so there’s no surprise when entrepreneurs have mixed emotions about forming a business partnership. The thought of having to negotiate almost any decision can make some business owners cringe; then there’s being accountable to someone else. In some ways, having a partner is a return to many of the annoyances of employment that originally drove a person to start a business.

Personal Limitations

In almost any business, the time comes when the entrepreneur realizes that he or she has weaknesses. Whether in business or trade skills, business owners often find their limitations keep their business from growing. When this happens, a good way to fill in the gaps in competencies is to form a partnership.

Choices to Make

The decision to accept a partner forces some tough decisions. Among them are:
– Is business growth worth yielding power and equity to another person?
– Can another person wholly share the same vision as the original owner?
– Is forming a partnership the best way bring the capital and skills into the business?
– Will the business grow enough to make a smaller percentage of the profits a larger dollar amount?

Why Partnerships Make Sense

A trustworthy business partner is an invaluable asset to a growing company. The added investment capital helps provide needed funding and a second set of eyes and hands can ease the management load. Of course, the added intellectual capital can prove to be the most beneficial aspect of a partnership. Still, business owners should consider other alternatives first.

Got Cash?

Businesses with enough capital should consider hiring contractors or consultants to fill in knowledge gaps. This keeps equity in the owner’s hands while laying the foundation for growth. Of course, dealing with contractors presents a whole set of issues that many entrepreneurs find more distracting than sharing equity.

When forming partnerships in an existing company, business owners can parcel out equity in small portions to help create lasting relationships. After all, when people have an ownership stake in a business, they tend to work harder and perform better in support of its success.

Finding the Right Partner

A business owner will naturally gravitate toward people with proven skills while looking for a partner. However, the relationship between is also important. The business owner must learn how to treat a partner as co-owner, not as an employee. This is why many people form partnerships with friends. They already have an equitable relationship they can carry into the workplace. Of course, partnerships can destroy a friendship when disagreements arise, so business owners (and friends) should consider that risk.

Establish the Rules

Partners should thoroughly discuss their ground rules before getting started. By understanding and complementing each other, a business partnership can become one of the most valuable relationship a person has in their lifetime.