Should I Find a Partner? Your goal is a marriage made in heaven, not a partnership headed for divorce court.
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Q: Mywife and I have a plumbing business operating as a soleproprietorship, and we're thinking about expanding our businessby forming a corporation with two other plumbers. Can you advise uson the pros and cons of teaming up with outside partners?
A:We'd be delighted to give you a few things to consider as youdecide which route of expansion to take. As your question implied,there are both pros and cons here-plenty of both.
Let's clear up one thing right away: Your new partners willnot be "outside partners." You're contemplating anarrangement as serious as marriage. As such, it's anarrangement that can provide as much fulfillment as it doesanguish. Your business partners will be a part of your life,morning, noon and night. Decisions you make now could well becomesources of endless conversation, debate and, finally, resolution.And if you select the right partners, the extra time you spendmaking those decisions can pay off in terms of better customerservice, higher employee morale and greater profits-to name just afew benefits.
Some decisions will even be deferred indefinitely, often for thebetter. But make no mistake: If you're used to running yourbusiness as many sole proprietors do-like a personal piggybank-those days will be fond memories. Your new partners will beputting their money, time, expertise and dreams on the line.They'll be looking for a return and a say.
Of course, you're looking for a return, too. You want toexpand your business. You didn't indicate whether you wanted toexpand by moving into new locations, offering new services ormerely taking on additional business. Others may disagree, but webelieve you should thoroughly evaluate all other options beforebringing partners into your business.
Money is one of the most common reasons for seeking partners.You may need the money, but do you really want to give up the totalcontrol you now enjoy? Is a bank or Small Business Administration loan abetter avenue? Can your suppliers offer expansion capital? Ifyou've rejected all other sources of expansion and you'reset on bringing in partners, be aware of what your ideal partnerswill bring to the company: money or expertise. And make sure youhave a clear understanding of each partner's responsibilities.Fully discuss how profits and losses will be distributed, howdisputes will be settled, and when and how additional partners maybe brought into the business.
As excited as you are now, try to understand that your businesslife will change in ways you can't imagine. Know your futurepartners as well as you can. We know two businessmen who even hadan "engagement" before the final "vows." They"lived" together for six months, acting as one businessinformally. In the end, they didn't become partners; instead,they formed joint ventures for projects they couldn't handlealone. For the other 95 percent of their business, they'restill independent businessmen and competitors. It's anarrangement that worked for them and could work for you aswell.
Rod Walsh and Dan Carrison are the founding partners of SemperFi Consulting in Sherman Oaks, California and the authors of Semper Fi: Business Leadership the Marine CorpsWay.
The opinions expressed in this column are thoseof the author, not of Entrepreneur.com. All answers are intended tobe general in nature, without regard to specific geographical areasor circumstances, and should only be relied upon after consultingan appropriate expert, such as an attorney oraccountant.