Business Link

- company on the lonely road of entrepreneurship

by Michelle Hardy-Berrington

Small business owners often find the entrepreneurship road very lonely – and steep. Greater rewards may result from forming a business partnership, offering more freedom for owners with shared business tasks and the potential to earn greater profits. But – like a marriage – a business partnership can be enriching or debilitating. The biggest difference is that a business partnership can have a start and end date.

Pros
Building a small business can be more rewarding and profitable in a partnership environment. The ideal is a business partnership structure when there is a candidate who complements your skill set and adds value to the company. Partnerships suit the more cautious entrepreneur or one with limited capital and resources. Risks and responsibilities are shared, (although then so are the profits). Partnerships are best when they bring together different knowledge and skills to address complex problems, and creates additional capacity to plan and develop services.

Cons
Business partnerships are not easy. They require new interpersonal skills and approaches and resources can be wasted by squabbles. A lack of clarity about accountabilities can result in finger pointing when things go wrong, and preoccupation with process and bureaucracy can lead to a dysfunctional business. Partnerships will also suffer when a dominant personality controls discussions and decision making. Another disadvantage of partnerships is that when one partner wants to leave the company, the partnership generally dissolves. In that case, the partners must fulfil any remaining business obligations, pay off all debts, and divide any assets and profits among themselves.

Compromises
Partnerships can work when the right foundation is laid in the beginning. Before embarking on a business partnership, ensure you have the following procedures in place:

Clear shared objectives
A realistic plan and timetable
A commitment from partners to mainstreaming
Clear framework of responsibility and accountability
Trust between partners
Realistic ways of measuring achievements
Defined business roles
A partnership agreement with division of equity, division of profits and losses, compensation, distribution of assets on dissolution, dispute settlement clause, length of partnership
An assigned partner with veto power to avoid stalemates – 50/50 is a recipe for stalemate