The downsides of having a business partner
There are a lot of benefits to having a business partner. However, these partnerships can be the beginning of the end of business and friendships if you don’t give them enough forethought and planning. Choosing whether to partner up is not a decision that should be taken lightly. You are putting your money, reputation, and often friendships, on the line. Partnerships gone wrong are more common than most business owners would like to think. So, we have provided this guide on the downsides to business partnerships so that you can make the best decision for you.
Giving up control
An upside to starting your own business is you get to be in control. Having a business partner means that the highest level of control in your business is split. As a result, the impact your partner can have on every aspect of the company is high. Even the tiniest decision they make can snowball into having life-changing consequences for you and your staff. This is great news if your partner has a mind to match or even outweigh your own business skills. But, there’s a chance they could also be completely incompetent. And that’s when things start to go down the drain. Things like your cash flow, reputation, and not having to explain to smirking onlookers why you thought this partnership would be a great idea. If you are choosing to partner up, be confident your other half is up to the task.
A business partnership often means that both partners are jointly and individually liable for the activities of the other. If your partner decides to go on a week-long partying spree that becomes the feature of any publicist’s nightmares, or embezzles, or drowns your company in debt, the repercussions will land on your head just as much as theirs. You’ll be in serious trouble and responsible for any debts, not just half of them. This shared liability means you need to be sure you are partnering with a sensible person you can trust.
If your team working skills are up to scratch, having a business partner allows you to be more efficient, and increase your profits. But, this is dependent on whether a partnership means you are more productive than when working alone. If your partner doesn’t know what they’re doing, decisions will take longer and they won’t lead your company in the right direction. It might turn out that your partnership leads to lower profits than ever before. Then, you have to split the money with the person causing you all this loss! That doesn’t sound like the most sensible business plan in the world, and any reasonable person would be upset by this if their partner wasn’t pulling their own weight. But, this is a very real possibility.
Breakdown of relationships
Sometimes, personal friendships or romantic relationships have no place in business. Personal feelings get in the way of you making the most logical and profitable decisions. You end up giving second and third and fourth chances to someone who will make the same mistakes again and again. Not because they don’t want to succeed, but because they are not capable of running a business.
Yes, relationships in business can mean you have similar goals and are more in tune with each other’s thoughts which could lead to you skipping off into the sunset together with wads of cash from your amazing business. But, be cautious. This is not easy, nor particularly common. As John D. Rockefeller said, “A friendship founded on business is a good deal better than a business founded on friendship”. Starting a business with someone you know and love is a risk you need to be sure you’re willing to take.
If you need helpful advice on starting a new business or becoming more profitable, Big Hand is here to make the process much more manageable. We offer the best business support as well as taking care of your accounting needs to take some of the weight off your shoulders. Get in touch today on 0161 327 2911 to take the first steps.