One of the most overlooked business models is a partnership agreement. Less than 10% of companies register with more than one owner. Partnerships are a way to establish a successful business or expand your current enterprise. Here are five reasons to consider recruiting a partner.
1. Access to Capital
Lenders consider the financial risk of all borrowers in the business partnership. Underwriters will examine the personal credit history of all owners. If your personal credit history is weak, you can negotiate better loan terms if your partner has a more positive rating.
2. Share Expenses
Your partnership agreement details the percentage of expenses that all owners are responsible for. This reduces the amount of capital you will need to invest in the business. You may prioritize knowledge and experience over the partner’s financial support. Speak with a commercial attorney to understand how to write a partnership agreement that protects both you and your co-owner.
3. Synergize for Success
Successful entrepreneurs recognize their limitations. Some people make great accountants, others are better at managing team members. Create a business partnership with someone who has complementary skills. This allows you to focus your time and energy on things that you enjoy and do well.
4. Reduce Governmental Regulation
If you are ready to expand, you can transition to a publicly traded company or find a partner. Establishing your company for an Initial Public Offering is very expensive and comes with extensive governmental regulations. Creating a partnership allows you to grow your business while still maintaining control of your enterprise. While you will have to work with your partners to make decisions, you are not as restricted as you would be as a publicly traded enterprise.
5. Improve Work-Live Balance
Burnout is one of the biggest personal challenges that entrepreneurs experience. It is mentally exhausting to be the sole person responsible for the success of your business. Even with a great staff, you are still responsible for managing all aspects of the company. A business partnership allows you to share responsibilities with one or more owners. This frees you up to have a more balanced life.
Once you have decided to start a partnership, take the time to interview candidates for the agreement. Select a partner based on their ability to work with you. You will need similar communication styles and business goals. Once you find the right match, your enterprise is sure to flourish.