Establishing with investors or partners a relationship enriches your company with talent, material resources, and effective human capital. At the same time, making the wrong choices of business partners may end with serious problems.
What to expect in business partners?
No business is static. There are changes in the market, entry of new competitors, new challenges, opportunities emerge, and some leave the scene. With the growth of your company, the market share increases. It is a must to adapt to a business plan and implement a growth strategy.
The important step is in handling the issues relating to business strategy, human relations, and finance. It enriches your company with talented material resources. The critical part is in expanding your company with business partners. Every company is different, so consider the objectives to bring investors inside your company.
If you believe with the right business partner, you can take your business to the next step, identify the qualities your partner possesses. Your answer should be yes to these questions.
- Do you and your partner have the working experience together?
- Do you know your potential business partner well?
- Are you confident in the abilities of your potential business partner?
- Do you have a set of abilities?
- Do you both compliment each other’s working styles?
- Do you and your potential partner communicate properly?
- Finally, do you want a partner for your business?
If you get a potential partner, you can create a Partnership Agreement. It should detail the roles of both of you. A well-written agreement is a must to proceed with care.
How to expand through investors and partners?
Clarity is a must as you plan seeking investors or partners. There is a need to define your needs. It helps in developing a clear understanding of bringing investors or partners into your company. Is it something else or money that you want for your company? Do you want to raise money by introducing partners or looking for productive talents’ capability?
It is costly to borrow money, and selling equity has an impact on you as the company owner. Instead, bringing in partners will change the way the company runs. Thus, clarify the reasons you are seeking an investor or a partner so that it helps to manage the process.
Determine which of these describe your needs to bring in a partner or investor:
- To add new products, production capability, property, or patents to the business
- To introduce any special marketing, technical or financial skills to the business
- To get new capital to the business to expand your facilities, inventory, or equipment, increase marketing line, hire more employees, or develop a new product.
Willingness to Receive a Partner
Entrepreneurs are self-reliant people. They have the confidence to manage a business, but there is the risk of starting it. Self-reliance and motivation enable people to create a business. However, when you consider seeking an investor or a partner for your business, it is not easy. On working with a partner, you must be willing to share your autonomy space. With a partner, you get to divide your responsibilities and share ideas. Look for someone with interests and skills. It helps to strengthen your company. Think hard and long about the emotional terms to accept a business partner.
Is Partnership Right for You?
Including business partners has its advantages and disadvantages. It is a must to determine if a partnership is right for you. If you decide, write the partnership agreement and move to expansion strategies. Having partners has its advantages and disadvantages such as:
- Sharing responsibilities
- Multiple owners make borrowing easier. There is a combined credit rating, giving a stronger feel.
- Personal liability of partners of taxes, debts, and other claims makes another partner also liable.
- Any partner can commit to obligations the business
- There is a lot of potential for power struggles and disagreement.