The Pros and Cons of Partnership, Explained


If you’re running a small business by yourself, you make all the decisions. You decide which employees to hire and fire. You create a marketing plan to sell your products. You direct your employees. The experience can be stressful — and maybe even a little lonely.

Some help would be nice. Taking on a partner could be a good way to get it — if you know how to navigate those sometimes-murky waters.

Let’s look at the pros and cons of partnership to see whether finding a partner makes sense for you.

Partnership Pros

  • Additional skills or knowledge. A suitable partner will bring skills and knowledge that you don’t have. You might be good at managing operations and finding the best suppliers, but an excellent partner might be better at making sales and bringing new customers.
  • Division of labor. A trusted partner can handle more of the day-to-day operations, giving you more time to think about the big picture or more time to spend with friends and family.
  • Access to capital. A partner could provide an influx of cash or have connections they could tap for capital. A partner could strengthen your business’s creditworthiness and let you borrow more money to finance growth. And with a partner, you have someone to share the financial burden with.
  • Moral support and motivation. If you’ve been dealing with problems alone, it can be refreshing to have a partner come in and support the business and bring a new spirit of motivation.
  • Balanced decision-making. Business decisions are rarely cut and dry — and it’s rare that you’re certain that your decision is one hundred percent the right one. Having a partner means having two heads to look at a problem and come up with a solution, giving you more comfort that you have made the best choice.
  • More business opportunities. By sharing the labor, a partner will give you more time to pursue attractive business opportunities that you wouldn’t have time to pursue as a one-person operation.
  • New perspectives. When you’re buried in the everyday operations, you don’t always have time to see different ways of doing things or track every change in the marketplace that might provide opportunities. A partner can bring a fresh perspective and help you see things that you might have missed.

Business partnership handshake concept.Photo two coworkers handshaking process.Successful deal after great meeting.Horizontal, blurred background

Partnership Cons

  • Profit-sharing. A key downside of taking on a partner, Business News Daily says, is that you have to give up a share of your profits. You must be willing to accept a lower percentage in exchange for your partner’s contribution to the business.
  • Loss of autonomy. As a sole owner, you’re used to making decisions and setting your business’s course by yourself. With a partner, you have come to an agreement — and that can sometimes create friction.
  • Conflict. Sometimes partners don’t share the same vision for the business. They might not agree on the direction of the business or even which employees to hire. Leaving such conflicts unresolved could lead to long-term problems.
  • Work ethic differences. Partners might have different levels of dedication to the business. Your partner might not work as hard as you do — but they might expect the same rewards. If one partner works every minute but the other is less committed, that’s a signal the partnership isn’t healthy.
  • Unbalanced compensation. How are each partner’s skills valued? Is there a balance between effort and reward? Unbalanced compensation could create tension in the partnership.
  • Liability. If a partner feels entitled to make decisions alone, that could create dangerous liabilities for the business. Research the limited partnership pros and cons if liability is a concern, as this type of partnership involves a different liability structure than a general partnership — a limited partner is usually only liable for business debts up to their investment and generally has a little less say in the decision-making.

Is Partnership Right for You?

Ultimately, you must identify the type of owner and manager you want to be. Can you share the decision-making with someone else? Are you willing to share the profits in exchange for a partner’s contributions? How do the pros and cons of partnership — or the limited partnership pros and cons — balance out? Is a partnership really worth it? Only you can answer these questions.

If you continue to go it alone, there are opportunities to find funds for working capital and equipment purchases, such as a small business loan or an equipment financing plan.

Think carefully about these pros and cons of partnership, then decide whether taking on a partner is right for you.

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