Simply adding employee positions can seem the most obvious choice. For the sole proprietor who doesn’t want to dilute ownership, that can be the right move.
However, adding business partners provides something that hiring employees do not; the motivation and dedication that comes from having a stake in the business. An employee typically has the freedom to leave their job for another at any time. Giving a partner some share of your business can result in an uptick in motivation and dedication. They have a vested interest in persevering through challenges and helping the business become stronger and more profitable. Since partnership means sharing ownership, it’s not a decision to take lightly. Sometimes it makes sense to retain ownership and decision-making power yourself, however finding the right partner can be incredible to the success of your business.
Key reasons to take on partners and share ownership include:
- Reducing the burden on your time and energy
- Sharing challenges and opportunities with others who can help the business grow beyond what you could accomplish on your own
- Reducing the risk of turnover by adding partners instead of hiring employees
Here are some other important factors to consider.
Enhanced perspective, innovation, and skillsets
Bringing on one or more partners can also bring a breath of fresh air. Instead of relying on your perspective, creativity, and skill sets, you’ll build a team of equals whose combined skills and ideas enhance the business.
If you’re solo, you have to be the business developer, the project manager, the hiring manager, the client partner, the quality assurance check, the accountant; the list goes on and on, all while keeping growth in mind. If you divide these responsibilities, you will be able to focus on doing a few things extremely well. The stability of your growth and of your company will be much greater.
Navigate opportunities and challenges
When you work all on your own, it can be challenging not only to deal with downtimes in your market and industry but to fully pursue growth opportunities.
Improve your offering and grow the business
Working solo can cause stagnation, and your business can suffer from a lack of perspective.
Joining a partnership can increase and improve your offering. It keeps you accountable for your work and performance.
Transparency, conflict management, and a solid agreement
Conflict follows partnership. The key to resolving conflict is transparency, communication, and mutual respect. It is essential to define the respective roles in the greater organization, and evolve them as the team gains experience working together. When conflicts inevitably arise, it’s important to stay solutions-orientated and to respect each person’s viewpoint.
No matter the entity, arrangement, or number of partners, a detailed, signed partnership agreement is essential.
Each partner needs to know:
- Their ownership percentage of the business
- Their responsibilities to the organisation and their fellow partners
- The exit strategy or protocol for circumstances where a partner needs to leave the business
Upfront understanding prevents future problems
Aligning interests, responsibilities, and objectives are essential not only at the beginning of the partnership but on an ongoing basis. It’s important to regularly discuss and align goals and expectations. Partners need to understand how they plan to share not only workload but also profits and any spotlight or recognition.
