Starting a business is a dream for many individuals. This desire has been increasing in recent years mainly due to the great success stories that entrepreneurs and their startups had because they took a risk and did not rest until they reached their goals. This desire can be exciting, but also frightening. One of the steps starting a business are the advantages and disadvantages of partnerships.
The high cost that undertaking entails and the high associated risk causes many individuals to give up on their dreams, even not even considering this hypothesis. Have one partner to accompany this adventure may be the solution to this fear, but it is not a solution for everyone. One of the most frequent questions that entrepreneurs face, especially at a very early stage of their business, is whether they should have a partner or not. The answer is not straightforward and the decision must be taken if startup with one or more partners or on their own. This article lists the advantages and disadvantages of partnerships for startups.
Advantages in having a partner
Lower financial risk
Common partner or more partners, there is more capital available which means that financial risks are also shared. Thus, the impact of eventual losses or debts is reduced, mainly at the beginning of the company.
No one has all the skills necessary for business success. Thus, the entrepreneur when selecting partners who have different knowledge and skills than yours, will allow for greater complementarity of skills. Thus, it provides an enrichment of startup.
Common partner to the side, the entrepreneur will have someone to share the responsibility of the business with. That is, it can share the concerns and distribute tasks of the business activity and consequently requires a more demanding job and organization. In addition, it can allow better decisions to be made since two heads are better than one.
Greater mutual support and motivation
Have one partner is to have someone the entrepreneur can count on. In addition, he is someone who will work hard for the same goal: to achieve the company's success.
Greater stability and credibility
Investors, customers and suppliers feel more secure and confident with partners. That is, when they see two or more people working together in a business. The entrepreneur's ability to obtain partners for your business it conveys the idea that it is professional, balanced and credible.
Disadvantages in having a partner
To have a partner, the business profits must be shared. In other words, sharing responsibility is for good situations and for bad situations. In other words, this division of profits does not always seem to be the ideal choice for many entrepreneurs, which perhaps shows that it is better to undertake alone.
Problems in personal relationships
This situation is more frequent when a business is started with family or friends. Disagreements about the direction of the business or incompatibility of personalities can cause friction between these individuals and even that relationships are severed.
All decisions should be made jointly between the entrepreneur and the partners, which can lead to disagreements about the direction of the business when there is no consensus between the two parties. These disagreements can lead to friction between them and even the dissolution of partnership.
Minor personal flexibility
To have a partner, the entrepreneur will not have as much freedom to develop the business the way he wishes. Here, you will usually have to set a work schedule and the tasks will have to be balanced between the partners.
Once given the advantages and disadvantages of partnerships, you need to determine what matters most. In general, experts say that partner for creating a business are advantageous. It is up to the entrepreneur to analyze the specifics of his business, as well as his strengths and limitations as a professional, without forgetting his resources, his work style and his personal goals.
Obtain one partner for financial purposes it is the most common that exists in this entrepreneurial environment, but its personality must also be relevant to avoid possible future conflicts due to differences in business vision. It is also essential that the skills complement each other in order to obtain the skills necessary for achieving success.
It is also necessary to take into account that starting business with friends and family is very different from living with them outside the professional context. Thus, the entrepreneur must assume a professional position from the beginning and guarantee together with his partner or partners, that the duties and responsibilities of each are detailed in a formal contract. This document must explicitly contain the division of labor, the amount of capital each will contribute, what each has, how decisions will be made, how profits will be shared, among other essential topics in order to avoid future conflicts and misunderstandings .