Should I become a partner or a subcontractor in a new business venture?

By Brad Sugars

Opinions expressed by Entrepreneur contributors are their own.

I am starting a new business venture with a friend. He already has an established business in advertising and is doing OK. He would like me to start a new division of his company teaching computer-based instructional lessons. I will do all of the work, including researching and structuring all the classes, teaching them and even advertising for clients. Should I become a partner in this subdivision of the business, or a subcontractor? If I build this from the ground up and it really takes off, I want to make sure I benefit from our success. How should I structure this deal so that I get the most out of the venture, make it appealing to my new partner and protect myself?
Should I become a partner or a subcontractor in a new business venture? In reality, this isn't an either/or question. You could always start out as a subcontractor with an option to become a partner or get shares of the business based on growth and delivery of certain targets.

You could also work out a deal where you would pay commissions back to the established business based on the numbers of leads and customers the established division routes to your division. Essentially, all of this is open to negotiation, and the first rule of negotiation is that there are no rules. It is simply finding a solution that will work best for both of you--so you can both share in the success of the new venture.

All the best.
Brad Sugars

Brad Sugars is the founder and chairman of ActionCOACH. As an entrepreneur, author and business coach, he has owned and operated more than two dozen companies including his main company, ActionCOACH, which has more than 1,000 offices in 34 countries.

Editor's Pick

Related Topics

Data & Recovery

Get a Cybersecurity and IT Bootcamp For $39.97

Help keep your digital assets safe with cybersecurity courses (reg. $754) on sale for a limited time.

Business Ideas

55 Small Business Ideas to Start in 2023

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2023.


Limited-Time Price Drop: Dual-Camera Drones for $110

Get an Alpha Z Pro 4K and Flying Fox drone bundle before supply runs out.


How to Master Decision-Making in a World Full of Options

Use these seven practical strategies to make more effective business choices.


Travel Smarter With a $40 Member-Exclusive Club

Travel for less with $59 off a one-year Travel Buyers Club membership.

Money & Finance

What Are The Safest Investment Options for Earning a Good Return Over Time? A Financial Expert Explains.

In times of financial uncertainty, these options can provide a safe and reliable way to invest your money.