By Fernando Berrocal
Many “first-time entrepreneurs” start a new startup on their own (or solo), handling all of the hard labor that comes with starting and managing a brand-new business. However, we are a so-called "social animals" species and from all of our educated years (from kindergarten through college), we are surrounded by our peers. When we first start working, we mostly have to collaborate with others. Working with others is something we frequently take for granted. So, why do so many people go it alone when starting a new business?
If a random person comes up with a business concept with their peers or co-workers, they are more likely to start a business jointly. However, if the business concept is all your own, you are unlikely to consider bringing in partners under any circumstances. So, is going solo a good idea in general? It relies on a variety of things, including your personality and the intricacy of your business. No one can be an expert in every element of a new business, so if you go it alone, you'll need to employ someone to help you with the things you don't know how to do properly. It's also an issue to hire someone before you have a “revenue stream”.
Working alone, even if you meet clients every day, is lonely. It's nearly enough to get you into a joint venture just for the sake of the business. There are several horror stories regarding shattered relationships. Let's compare the advantages and disadvantages of establishing a business alone versus with a partner.
The advantages and disadvantages of establishing a business on your own:
On one hand, the pros of establishing a business are mostly that the simplest organizational form is a sole proprietorship, there will be no disagreements about business choices, and that you are mainly the cause of your success. On the other hand, the cons are that even if you aren't an expert at everything; you must do it all, that you can't take a vacation without shutting down your company, and that you may use technology to conduct work while on vacation, and mainly that you have no one to bounce ideas off of and no one to give you a second view.
The advantages and disadvantages of beginning a business with a partner:
Concerning the pros, it's that it's preferable to have more than one head, that the participation of a partner(s) to startup financing helps you to scale up your business more quickly, and that it's more likely that you'll have the proper people for all aspects of the business. About the cons, if the partners have opposing viewpoints, making decisions is tough; disputes will inevitably arise, and to fulfill the demands of all partners, you must pick an appropriate organizational structure.
What characteristics should you look for in a business partner?
The perfect partner balances out your flaws with complementary qualities, shares your beliefs, and respects your viewpoints. Partners must share their confidence in the viability of the business concept and be prepared to contribute time and money in proportion to their stake in the business.
Business Partnership Alternatives:
A third option is to form business alliances in which another business assumes responsibility for some area that isn't your strong point while maintaining their own identity. Are you too tiny to attain the necessary geographic reach to create a profitable scale? The answer might be a distribution partner. In another case, maybe your area of expertise is sales and marketing, but you've never worked in manufacturing. A manufacturing partner could be the answer. Don't take on a business partner until you have a thorough, credible agreement in place that sets out each person's share of ownership, how profits and losses will be distributed, and defines each partner's tasks, responsibilities, and time commitments. If the partnership needs to be dissolved for any reason, your agreement should examine how disagreements will be settled and explicitly state how assets, obligations, and costs will be split.
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