When Starting a new business it is often the case that an individual has a choice of going it alone or starting the new business with a partner. Depending on the skill set possessed by the entrepreneur and the volume of work required to set-up and run the business an individual might decide that having a partner is the preferred option.
An entrepreneur could always hire an employee to undertake the tasks which might otherwise be allocated to a business partner but it is often the case the monetary resources for paying staff is short at the business start-up stage.
In addition, where an employee is contracted to make significant developments towards a new business, it is frequently the case that they would expect some form of ownership in that enterprise.
When deciding to go it alone or with a business partner, one of the issues often witnessed is that of ensuring that both individuals contribute equal time, finance and effort in starting the new business.
Unfortunately division of responsibilities and each person having unique abilities often means that one individual has to conduct some or all of their assignments before the other.
For example, typically when starting a new business one of the first tasks which are completed is that of designing, writing and launching the corporate website. On the basis that one of the partners is a web designer the bulk of their work would take place in the early stages for the business start-up while their partner waited for it to be finished.
This mechanism can be harmonious provided when the opportunity exists the other partner increases their involvement and seeks to redress the imbalance.
It is sometimes the case that having worked tirelessly to complete their designated projects the partner who carried out the work does not witness their enthusiasm or commitment being reciprocated. The resentment which might result can have far-reaching implications for the success of the business.
The counteract the above possibility and to reassure an individual that taking on a business partner would not necessary be detrimental to them compared to going it alone, there are a number of preliminary actions which could be instigated.
In some situations, each partner might choose to set-up a separate company for example and carry out their respective tasks within each. Upon successful completion of these they can be introduced into a third entity.
This whilst being slightly more cumbersome than having a single business, does protect each partner’s contribution and in theory might allow them to store and then later utilise their work in another separate operation should the initial plan not reach fruition.
In the case where setting up a company was deemed to be the most appropriate trading vehicle, each partner could be allocated shares with variable dividends attached. Whilst dividends are largely determined by voting rights, the mechanism would exist to reward each individual according to the effort put it and the results of the work.
It is always difficult to know beforehand how a new partnership will progress and whether the dedication of one person will be equalled by the other. Any safeguards put in place will not be as valuable as a position where both partners are fully committed and adhere to their respective assignments.
Starting a business carries and multitude of risk and the decision of whether to go it alone or with a business partner is one of many an entrepreneur will have to make.
