Deciding to become an entrepreneur is an exciting journey filled with many choices, life lessons and adventures. One of the most important choices you can make in the early days of your company is deciding whether to be the sole owner or go into partnership. Like all things, there are risks and rewards to going into business with another person.
It’s a question we faced in the early days of forming Vivian & Virginia Ventures. Our decision to form a joint venture came from the belief that we each had a unique and valuable skill set to offer clients, especially when paired together.
When successful, having a business partner can mean having a built-in sounding board, a person to share the successes and challenges with, and can mean having the ability to grow your venture faster as each of you can divide up critical duties and business goals. But it also means needing to be able to listen to different perspectives and find compromise on goals and objectives.
Before deciding whether to go into business alone or with a partner, consider the following questions:
Are we aligned on the purpose and mission of this venture?
Determining your purpose and mission for your business is critical for charting the path ahead. Before you choose to start your own company or join with someone else you must ask yourself if all parties involved have the same long-term vision for the company, and similar metrics to measure success.
What unique skills do each of us bring?
Do you have background in fashion while your potential partner has spent a decade working in finance? In partnership, these kind of skill differences can be beneficial depending on your venture. Perhaps one of you takes the lead on branding and promoting your company while the other makes sure your internal infrastructure and finances stay on track. But while opposites may attract, be certain that your differences add to a wealth of valuable experiences for your company. Likewise, if you and your partner have similar experiences and skills consider if you need to add an additional person to your team, whether full-time, or as contractor to supplement any critical business needs.
Are we compatible?
Being a business owner means making many decisions daily. Regardless of your industry, starting a company is a dynamic, and evolving job that can be as exhilarating as it is stressful. When deciding whether to partner with someone ask yourself if your working styles are compatible: how do you resolve differences of opinion? Are they high-stress? Do you have firm boundaries regarding work hours and divvying up duties? Making sure that your personal and business styles mesh well will be critical during challenging moments.
What will be our operational agreement?
As you get your business affairs in order there are a few key documents you should consider drafting. In addition to a business plan and strategy this includes applying for your business license with your state and crafting an operating agreement that outlines the percentage of partnership for each owner and how profits are shared. Businesses can take several forms including:
Sole proprietorship
Partnership
Corporation
Limited Liability Company, also known as an LLC
You can find free advice with a simple online search for any of the above-mentioned business structures to learn what’s best for you. There are also many free templates you can utilize in the early days of starting your business. If you need additional support, remember that there are specialized attorneys who can help you. Before you hire anyone for their services, thoroughly vet their skills and expertise.
Starting a business is an exciting decision. But it also comes with many choices. Early on that will include how you structure your business and whether you choose to do it alone or with partners. Take the time to research the different company structures as well as reflect on your long-term goals before making any potentially permanent decisions.
“Contributions across partners are not always equal. Form partnerships with the people who can contribute what you lack.” - Unknown