First Federal Bank Blog

Is it time to bring a partner aboard to help with your business? Shifting to a partnership will have major implications for your company, so it’s crucial to assess your business needs and know what you’re looking for in a partner before making any sort of commitment. Here are some pointers to help you think through this important decision…
 
What is a business partnership?
 
Depending on your needs and the type of business you run, you can choose to form one of three main partnership arrangements, according to Carol M. Kopp of Investopedia. In a general partnership, profits, losses, and responsibility for all liabilities are equally split among you and one or more partners, and you’re all involved in running the business. A limited liability partnership shields you from personal liability for another partner’s actions. And a limited partnership consists of a general partner who bears full liability and one or more limited partners who aren’t involved in day-to-day operations.
 
Assess what a partner could contribute
 
Before moving forward, it’s vital to ask this question: Will a partnership help your business? LegalZoom writer Marcia Layton Turner notes several potential benefits. If a new partner has the ability to invest significantly in the company, this could unlock new levels of funding and growth while easing the financial pressure on you as the business’s sole owner. A partner could also contribute skill and experience in areas where you’re not as accomplished, adding a whole new dimension to your business. And if you’re overburdened with the responsibilities of running your company, adding a partner could ease your workload, provide extra support and perspective, and help you make more effective use of your time.
 
Consider the cons of partnership
 
It’s also important to consider whether a partnership could negatively affect your business. For example, if your business is struggling financially, paying a partner’s salary could be an unsustainable extra cost if it’s not offset by a significant investment. Adding a partner could also complicate your business’s taxes or disrupt established decision-making processes. And of course, there’s always the risk that you could end up stuck with a partner who’s a poor fit for your business’s needs — or one you simply don’t see eye-to-eye with.
 
Look at partnership alternatives
 
In some cases, you may be able to gain certain partnership benefits without adding a partner. If your business requires certain expertise you don’t possess, or if you need more assistance running things, you could simply hire an employee instead. If you’re seeking the financial boost that a partner could bring but aren’t ready to take that step, it might be worth investigating loan options or seeking out investors instead.
 
Considering partnership candidates
 
If you decide a partnership is right for your business, it’s time to start searching for a partner. According to U.S. Chamber of Commerce contributor Jessica Elliott, it’s crucial to find someone who shares your goals, values, and approach to business ownership. A partner also needs to possess the proper skills and experience — especially as a complement to your strengths. You should also keep an eye out for candidates who can display strong leadership, act with integrity, and communicate clearly. Once you find the right candidate, make sure you’re both on the same page in every way — starting with a partnership agreement drawn up by a qualified attorney.
 
Bringing a partner into your business is a huge step, and one that shouldn’t be taken lightly. With careful planning and analysis, you can determine whether partnership is the best move to help your company thrive.