Many people who decide to venture into the world of business believe that the notion of going into business with a partner can be more successful than going at it solo. Starting a business with a business partner can usually cause more problems than it solves. This is usually the case when the partners are unable to agree on the same thing, the amount of responsibility for each is different, and the direction of the business is different as well. These differences can cause a business to fail quicker than anything.
The decision making process of the business is one of the biggest factors for problems cause in a partnership. To start with, there are only two partners, so if there is a difference of opinion, then there is no tie breaker and one partner will eventually have to give in to the other. The time it takes to make decisions, the longer it will take for the business to bring in a profit. This is problematic since a business cannot survive for very long without bringing in sales.
Often times, a partnership does not necessarily mean that everything regarding the business will be divided evenly. One partner generally ends up working much harder than the other. It may be a result of one partner having more knowledge or skills than the other or more available time to commit to the business than the other does. Whatever the case may be, it’s not uncommon for one person to have problems with the other regarding how much work gets accomplished when compared to the other’s volume of work.
In turn, the same problem can be seen when discussing each partner’s share of the profits. Some partnerships agree in the beginning to a 50/50 split of the profits, while others negotiate a 30/70 or similar split. If each partner does reasonably the same amount of work, then a 50/50 split of profits will not be a problem. Differences of opinions arise when the first partner sees that the amount of work they do is substantially greater than that of their partner. At this time they raise their concerns and insist on a different split of the business’ earnings.
Lots of partnership businesses squabble over the amount of work performed and the sharing of profits as a result of the initial investment. Partner A may have the funds to bring the business to fruition, while Partner B has the skills required for the business to generate sales. If this is not considered and agreed upon before hand, then one or both partners may find themselves at differences because one partner does less work or the other earns more money.
Whenever the time comes that you decide to go into business with a partner, make sure that both of you understand the potential business relationship and what each person can expect. It is also important for every partner to collectively list and agree upon the responsibilities, profit shares, and expectations of each person. After the business has been established and each role is carried out, there should be few questions or concerns raised because these or other issues.