Sharing the burden of starting a business can be a smart decision for entrepreneurs who share the same dream, but the wrong partner can cost the business more than they are worth. Read how much choosing the wrong business partner really costs.

Sharing the burden of starting a business can be a smart decision for entrepreneurs who share the same dream, but the wrong partner can cost the business more than they are worth. Read how much choosing the wrong business partner really costs.

 

The Benefits of Having a Business Partner

Let’s be honest when we say that nobody can do everything. You may have a creative vision for your small business but lack the financial skills to get it up and running, or vice versa. Having a business partner can really benefit the business by combining the skills and management of two entrepreneurs.

If you’ve been considering structuring your business as a partnership, you could save yourself money and risk when it comes to taxes or liabilities because you aren’t the only one responsible for the entire business – if you have the right partner.

If You and Your Partner Aren’t Compatible

Kids dream of starting a business with their best friend, but in reality it is so much more important to develop a level of trust and compatibility beyond being friends. If your potential business partner wants the business to go a different direction or doesn’t put in as much effort into running it as you do, you could lose time and money that could have been spent building your business.

If your business partner has poor credit, huge personal debt, a gambling problem, or generally gives you a bad vibe about their financial capabilities – you can avoid a costly problem if you decline the partnership. An untrustworthy partner can cost you more than missed profits – think about embezzlement, tax fraud, misallocation of capital, theft. Don’t risk your business and your reputation on the wrong partner.

How to Choose the Right Partner

Finding the right business partner is much harder than finding a wrong one, simply because you have to do your due diligence analyzing them as a person and as a long-term potential partner. Ask yourself these questions to help you decide if your potential business partner is a good choice:

  • How well do you know them? If you don’t know them beyond their career history, then this might be a sign that you don’t know them well enough to truly trust them.
  • Have you worked together in the past? It’s good to have a trial run with a business partner – similar to how you test if you should move in with a romantic partner – whether you were coworkers, classmates, or successfully ran a low-risk project.
  • Does their personality and working style complement yours? You don’t have to be best friends forever to be good business partners, but you shouldn’t be bickering over every business decision.
  • Have you had the money talk yet? This one is so important – if you argue or they don’t want to talk about how to divide the money at length, that’s a bad sign.
  • Have you spent time together outside of work? Are they fun to be with? Can you have deep conversations about your dreams and aspiration together? You might learn more about them than you’d think!
  • Can you really let go of control? It’s important not to get into a partnership just because you can’t afford to hire someone. A business partner isn’t an employee, they are an equal owner. You need to be able to trust them with making business decisions with or without you.
  • Have you decided on a “way out” contract? If the partnership goes south, there needs to be a predetermined agreement for buying out your partner or dividing assets.

 

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.

Loans are subject to credit review. Additional documentation may be required for credit approval. We are an Equal Opportunity Lender. Loans will be made or arranged pursuant to California Department of Corporations Finance Lenders License #6050609.


Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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