With apologies to Shakespeare, the decision to start a business with a partner or as a sole proprietorship is not one to be taken lightly. As one of two founding partners in Savvymom.ca, I can speak from the point of view of a very successful partnership but have also seen many unsuccessful partnerships end, usually due to a lack of communication and mutual goal-setting in the beginning.
The Pros
There are many benefits to establishing your business as a partnership, including the shared cost/investment requirements, shared responsibilities and work effort (someone to help you put the new office furniture together!), ability to bring complementary skills to the table and a broader base of contacts that can benefit the business as a whole, and finally (and most importantly in our case) the built-in mutual support and motivation that having a partner brings.
The Cons
Some potential downfalls in having a partner include the joint liability that comes with partnership (if your partner skips town, you are responsible for all the debts, not just half of them), having to share profits and a lack of total control over the business where decisions need to be shared and a difference of opinion can lead to problems in the business down the road. And finally, if the partner is also a friend, it’s worth keeping in mind the downside of the potential negative impact on the friendship any business disagreements might bring.
Know Thyself and Thine Partner
Are you the business partner type? Do you prefer doing things alone or do you feel better as part of a team? D you like to consult others when you make decisions or just unilaterally take action? These are important considerations when choosing to take on a partner.
And once you do decide to, it’s critical that you ensure that your partner is willing and capable to put in the same time and effort you are in the business – for women, this may mean discussions around child care expectations and other things. Some other questions that are important to answer are:
• Do we have the same motivation, values and work ethic?
• Do we have a shared vision for this business and how we want to run it?
• Do we have complementary skill sets and strengths so that we can take on discrete roles in the business?
• Can we communicate with each other in a respectful and honest way, immediately addressing any concerns?
When people ask about the reasons for our successful partnership, I often point to these questions. Our shared vision, our respect for each other’s strengths and commitment to the business and most importantly, our open communication styles have been key to our successful partnership.
Prepare for the Worst
While it is something that you may not feel like investing in at the outset of starting your business, with the many competing financial priorities, it’s critical to involve a lawyer and an accountant right from the beginning and establish all the proper partnership documentation. Just the act of getting these documents drafted forced us at Savvymom.ca to go through the many decisions we needed to make and assumptions we needed to articulate and the worst-case scenarios we didn’t want to think about but needed to. This formed the foundation of our successful partnership so it was time and money very well spent.
Sarah Morgenstern
Co-founder, Savvymom.ca
