The Rewards and Risks of Forming a Partnership

Millions of people co-own privately held companies, family businesses, and business partnerships, but establishing themand keeping them togetheris never easy. You might want to read this before you say "I do" to your next partner.

is often what makes ownership possible. Partners provide the missing link–the money, expertise, ideas, skills, connections, facilities, patents, whatever it happens to be–that an entrepreneur needs to make a go of a business.

What is it about owning a business that is so appealing? One answer is freedom. People are not free when they work for someone else. Freedom may be limited in a partnership (partners are accountable to one another), but there’s a world of difference between being an employee and being a co-owner when it comes to freedom.

For many people, too, the desire to own a business stems from a creative impulse. Ownership is a way for some to build something of their own. Others see ownership primarily as the path to a less-elevated goal: wealth. Wealth as a goal is potentially troublesome in a partnership. Partners who define their goals in terms of personal financial enrichment have a special obligation to be explicit about their motives, because focusing on one’s own financial gain won’t necessarily lead to decisions that benefit the business or one’s partners.

ADVANTAGES OF PARTNERS
Being a partner gives people more than ownership. Many people prefer to share the responsibility for the business. Some businesses by their nature require that more than one person be available and accountable. For example, doctors band together for the practical purpose of sharing on-call duties. In addition, being able to divide tasks along lines of interest or ability can make an enterprise not only more successful but also more enjoyable.

Partnerships offer people a chance to do things that they would not be able to do on their own, or to do them more successfully. Opportunities open up when people combine forces. … If you pit three co-owners against a solo entrepreneur, the three co-owners are going to out-think and out-strategize the single owner in most cases, as long as they don’t devolve into interpersonal conflict, or what some researchers call “affective conflict.” Partnerships also allow people to exploit opportunities more quickly, and in business today, speed frequently means the difference between success and failure.

From a psychological perspective, having a partner means having someone to share the emotional burdens of ownership. A partner can provide feelings of safety and reduced risk, a sense that “we’re in this together.” One of the biggest complaints of solo entrepreneurs is that no one understands the tremendous demands made upon them. Even spouses who try to be as empathetic as possible cannot truly understand all the complexities of starting and running a business if they’re not part of it. For some people, the fears that have kept them from starting a business become manageable with a partner.

For other people, having partners is simply more fun than owning alone. If the only option were solo ownership, they wouldn’t do it; the cost, in stress and worry, wouldn’t be worth it. Being on equal footing with someone else in the business, someone you can’t dominate and who can’t dominate you, makes for a more stimulating relationship than you

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