Author: Bob Press (TAP Financial Partners)

Bringing in a business partner can be just the infusion of money and expertise that’s needed to accelerate business growth. However, the wrong decision can set your company back and cause you some sleepless nights.

Here are some pros and cons to consider before making this critical decision:

Benefits

More money

You’ve likely invested a substantial amount of your own money into your business. Adding a partner will give you an instant cash infusion, as they will need to put in some capital to receive an equity share. (Be aware, however, if this is your response to being consistently short on cash, it’s a short-term solution to a long-term problem).

Extra hands

Imagine how much more you could get done if you had a clone. Even better, imagine what you could accomplish if you had a partner who put in the same amount of effort but focused on the business areas you don’t want to deal with. Having someone to take over the parts of the business outside of your specialty can significantly ease your burden and help your business grow faster.

A sounding board

As a solo business owner, you have to rely on yourself to make business decisions. A partnership gives you a built-in sounding board that can offer a new perspective to your challenges. Then, you can make decisions together based on your collective knowledge and experience.

Detriments

Loss of control

This is the reverse of our last benefit above. Sometimes, you’ll want to take the business in a different direction than your partner. However, you’ll need to come to a compromise instead of just forging ahead with whatever you think is best for the business.

Tense moments

You’re going to disagree with your business partner from time to time. In rare cases, disagreements can turn into a dissolution of your partnership. Make sure to have a partnership exit strategy in place in case this happens, so you don’t end up losing everything.

Profit-sharing

That immediate cash influx may not outweigh the financial loss of sharing profits with your partner. If you have multiple partners, you may end up bringing in very little profit overall compared to if you were going it alone.

Whether or not to bring on a partner is a major business decision that should not be taken lightly. If you need advice on how to grow your business, TAP Financial Partners can help.  Contact us to learn more about our services for small and medium-sized companies.