Forming a partnership when going into business is a common practice, and like marriage it's one of those things that can either be very good or disastrous. 

Why? Because a partnership means in essence you find one or up to 20 people whom you could trust unconditionally to take on joint or shared responsibility for the running of your business. There are legal requirements for forming a partnership an partners are jointly responsible for all debts and share the profits. How this pans out in practice depends on how carefully the agreement is drawn up on the first place. I can safely say that in my experience a large partnership can be one of the most disastrous and self destructive business models of them all, as it lends itself to factions forming and bitter fightinga bout debts and profits.

If you are consider forming a business partnership with a colleague or friend, there are a number of emotional, practical and legal issues and implications which you need to address before you begin to trade.

Emotional considerations
You need to be totally certain that you can work with this person, and that you can trust them. Many business owners have come a cropper over the years by finding out that their business partners were not people that they could work with or trust and you really don't want the pain of that break up! Do you argue? How well do you resolve your differences - a silent sulker is unlikely to work well with a quick fire type who likes to get things sorted out and resolved quickly.

Practical implications
Do you complement each other with your strengths and weaknesses, and do you work well together? Is each partner able to bring something solid to the table, such as time, experience, contacts, ideas or investment.

Legal considerations
Partnerships share the control, responsibility and finances, which could be with one other or several people, thus reducing the overall input one individual will give to the business. This can be a distinct advantage to that of a sole trader.  

 

 © Claire Burdett. No content to be reproduced without written approval of the author.

Claire Burdett is the Founder and Director of Funky Angel. She is a Writer, Journalist, and Editor, Integrated Marketing Expert, and Home Business Mentor.

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