By Brenda Weathers Hargroves
I’m sure you’ve heard people say a partnership is like a marriage. In many ways an individual is as bound to a business partner as a man or woman is to a spouse. And as with most relationships, there are both positive and negative side effects of the arrangement.
A sole proprietorship essentially depends on the business acumen of one owner, whereas a partnership has the advantage of tapping the strengths of more than one person. Before embarking on the partnership, those involved should have an open and honest discussion that defines who possesses what experience and skills and who will be responsible for what task(s). Documentation of responsibilities should be spelled out in writing (a partnership agreement).
For example, years ago I partnered with another woman to start a temporary and permanent placement firm. We determined that selling was her strong point while mine was administration. From that, we decided she would be responsible for the marketing side of the business, and I would be responsible for the operational side.
It is important to recognize that this arrangement is only beneficial if 1) the partners have clearly defined their individual business strengths 2) specific roles are assigned and 3) all parties involved unmistakably understands that they must live up to their contribution commitment. Most partnerships thrive when the partners individually and jointly understand their role and actively pursue the skillset(s) they each bring to the business.
In addition to benefiting from individual business strengths and experience, many times partnerships allow owners to maximize their personal characteristics. My partner was friendly and outgoing, whereas I am more effective behind the scenes. Our personality traits meshed well in that she introduced and verbalized our services and then I managed the process.
The ability to bounce ideas off of each other is another advantage of having a business partner. You know, the old adage “two heads are better than one.” In the ideal situation business partners share the same focus and vision which allows creative and fruitful suggestions or guidance.
Problems will likely occur when partners do not share the same focus and vision. How each partner views business practice, envision the business’s future and has clearly defined desired benefits are critical issues. The answers to these questions can have a definite impact and could affect a partnership’s success.
For example, one person may see the business as a means to an end, with the overall goal of developing it in order to eventually to sell it. The other partner may look at it as something he or she may want to own until retirement or pass on to family members as a legacy. One partner may want to cautiously expand the business at a slow, but steady pace, while the other may envision doubling profits in a year.
Work ethic also plays a critical role in the success of a business partnership. Imagine the situation where one owner has a very strong work ethic, while the other simply wants to do enough to get by. Picture the scenario where one partner works late and comes into the office on weekends, while his or her counterpart leaves exactly at 5:00 pm or earlier each day and never considers working on the weekend. It’s easy to imagine how long it would take for this situation to create negative feelings.
Many times, people take what they think is a comfortable route and start a business with a long-time, trusted friend or relative. Again, as in marriage, you never really know each other until you live together. Unfortunately, if the partnership does not survive, it is likely to result in the end of a friendship or an estranged situation with a family member.
Conclusion
As you can see, partnerships are delicate situations that must be constantly nurtured if they are to experience success. Weigh the pros and cons carefully before deciding your business structure. And I repeat, compose a partnership agreement that spells out desired parameters and is understood and signed by all involved parties.
Do the benefits of a partnership compensate for the potential risks? If so, pursue it. If not, you may want to consider tackling business ownership alone. Let me know what you think in the comments section below.
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