Ask Doug & Polly: Taking On A Business Partner Makes Sense, But There Are Dangers | Economic news

Doug & Polly White



QUESTION: I am considering taking on an associate in my small business. What are the advantages and disadvantages of this? Do you have any tips for successful partnerships? What if things go wrong?

ANSWER: A business partnership is a deeply personal thing. In some ways, it can be like a wedding.

Such a relationship should not be concluded lightly.

In some circumstances, hiring a business partner can make sense, but the dangers are many.

The tips below can help you avoid many potential pitfalls:

1. Capital contribution: Hiring a partner who can make a cash contribution may be a good idea if the owner needs capital to grow the business or wants to withdraw money from the business.

2. Additional skills: Often, to grow dramatically, a business needs a skill set it can’t afford to hire. The founder may decide to use an equity stake to attract a qualified person with skills essential to the business.

3. Alignment of interests: Ownership can motivate employees and align their interests with the founder.

4. Compatible company: An entrepreneur may decide that the value of his business will be increased by merging with another business. Synergy can be created by an addition to the product or service offering, geographic expansion, upstream or downstream integration, economies of scale or the elimination of a competitor.

About Aldrich Stanley

Aldrich Stanley

Check Also

3 steps to help your business survive the changing market

Like many entrepreneurial businesses, Farmer’s Fridge had to significantly adjust our operations during the pandemic. …