For people wanting to start a business in Ohio, they may think that having a business partner is a good choice. While this can be beneficial in many situations, it is important to weigh the pros and cons before partnering with someone.
Forbes discusses some of the cons of taking on a partner. A big one is that a partner takes away equity in the business. Rather than take on a partner due to financial reasons, it is usually better to take out a loan instead. If one does not have enough assets to cover the loan amount, there should be provisions in place to get equity of the business back after a certain period of time.
Another reason to reconsider a partner is that many times expectations of the other are not met. The partner may not do a fair share of work or have the necessary strengths to balance the partnership. A good partnership requires an agreement that clearly establishes the roles each one will play and how compensation works. A partnership can also be messy if one wants to get out of the business or is not able to contribute as much money as originally agreed upon.
Inc. says that a partnership can be beneficial, but there are certain practices that help make it so. Both people should have the same vision for the business, including at the early stages and as a potential Fortune 500 company. Good partners have skills and styles that are different but compatible. Each should cover a personality or strength the other does not have. Potential partners should also have difficult and detailed discussions around money and work expectations of each other. Ideally, partners should also have a history of working together so they know how they truly function in real life.