Have A Business Partner Or Do It Alone?

Starting a business is both exciting and unnerving for aspiring entrepreneurs. First, you think about how much you want to earn and then what you want to sell in order for you to earn. But then you start thinking of all the tasks you have to do for the business to start. And subsequently you worry about where to get suppliers and where to set up the shop. Finally, you worry about filing your taxes and issuing receipts. For some, the workload you imagine completely obliterates your will to start it. But for some who are most determined, they remain unhindered.

The good news is that one of the best ways to get started without worrying too much is having partners. Having a group of people working as a team makes the work not just easier, but also more efficient. Here are some pros and cons when it comes to deciding to establish a partnership:

1. Ideas. As a group, brainstorming becomes more efficient. With good partners, you can constantly innovate in the business, as everyone brings new things to the table. You are not constricted with a single idea and everyone can critique and help improve your chosen concepts. This is not only beneficial in the conception of the business, but also throughout the operations when new products/services must be added to grow the company.

However, it is not always that you and your partners would be on the same page when it comes to decision-making. As there are more people presenting their different points of view, there is always a possibility that ideas will clash, which, if fueled in the wrong way, could lead to arguments. This is most true when choosing partners that you have not been around with enough to understand their characters personally and professionally.

If you are unsure with the people on your list, it would be safer for you to either look for other people you could trust and have the skills needed, or do it alone. Business suffers when the owners themselves could not get along.

2. Organization. Putting up a sole proprietorship is the simplest to start among any other type of business structure, but holds the highest risk for you. If the company is indebted, you are personally indebted. If you are lazy, the company becomes. In terms of having partners, setting it up can be a bit tricky and will require you to follow additional laws, from the registration to taxation.

You can opt for a partnership or a corporation if there would be other people involved. However, the good thing is that the burden of running the company is not entirely yours. The tasks you must perform as one of the business owners are less than those you would have to do if you were a sole proprietor.

3. Capital. More people would mean more money; and more money means bigger capital that can be used in starting up the entire business. The cost can be divided between the partners, making what could have been an insurmountable amount for one person reachable. And with higher funds, you get more options on which industry you want to enter and the scale of business you want to put up. You cannot overstress the importance of having adequate capital in starting a business. With ample funds, you can freely choose a location that would best suit your store, equipment that can handle the volume of orders, and enough funds to weather inevitable problems that will arise as well as the resources to pursue opportunities that will come.

As you and your partners contribute to the capital, you gain ownership and certain degrees of control over the company. There could be partners who would contribute to the capital but leave the control to the remaining partners, and there could also be partners who may not have contributed money, but will be the one to perform the services that the company will be offering.

4. Risks and rewards. In a sole proprietorship, you are the business. Whatever debt the business enters, you are personally liable. That would also mean that if any legal action is made against your company, you would be personally liable. But the upside is that all the successes the company gains also go to you. In the case of having partners, profits will be divided among you. Starting and operating a business are extremely difficult tasks. Deciding whether to have a partner is one of the most important decisions you will make. Study first the pros and cons before choosing the path to pursue.
*Originally published by the Manila Bulletin, C-4, Sunday, October 30, 2016. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.