Should You Take on a Partner When Buying a Business
Purchasing a business is one of the most exciting steps for an aspiring entrepreneur. Being in business for yourself gives you direct ownership of your time, and it can quickly put your life on an upward trajectory. When considering buying a business, a frequent question often comes up, “should I take on a partner for this venture?”
Having a business partner has its advantages and disadvantages. The right partnership brings a synergy that allows you to accomplish far more together than you could individually. You can bounce ideas off your partner, and partners can keep each other motivated to press forward even when things are not going your way.
Here are some scenarios when it might be advantageous to take on a business partner:
- You Feel Like You Would be Spread Too Thin on Your Own: As a business owner, you must wear a lot of different hats, and you will need to manage a lot of different moving parts. You need to ask yourself if you are comfortable doing all of this on your own, or if you think you need some help. The answer to this question depends largely on your skills and prior management experience, as well as the size and complexity of the business you are purchasing.
- You Need Someone in the Business with Complementary Skills: Another reason to look at taking on a partner is if you believe you are lacking certain skills that would be needed to run a business. For example, maybe you are good at organizing, completing tasks, keeping paperwork up to date, etc. but you are not too strong with sales and marketing. In this case, it might make sense to bring someone and who has extensive experience in that area.
- You are Looking for Someone with Specific Expertise: Along the same lines as the previous point, you might want to bring on a partner who is an expert in a certain area that you know very little about. One common example is technology. You realize that you need to make some technological upgrades to stay competitive in the industry your business is in, but you do not know enough about that area to competently undertake this project. This is an instance when having a tech expert on your team would be very helpful.
- You Need Additional Help Financing the Business Purchase: Oftentimes, entrepreneurs need additional capital to purchase their ideal business. And one way to raise this kind of capital is by taking on a partner who has the necessary resources. In a case like this, the one who is putting up the additional financing may want to be a silent partner and leave the day-to-day operations to you. This, of course, is something you will need to work out with your prospective partner.
Finding the Right Partner for Your Business: If you have decided that taking on a partner would be beneficial for your new business, you will need to look at prospective candidates to find someone who you think will be a good fit.
Start your search by asking within your network of family and friends for someone they would recommend. You might also want to tap into your social media contacts (e.g., Facebook friends and LinkedIn connections) to obtain recommendations, although you will need to screen these candidates a little more carefully because you probably do not know them as well. If you are looking for financial backing, it might be helpful to search through the various angel investor networks as well.
Once you have a list of individuals who are interested, schedule some short meetings (either virtually or in person) to get to know them better, discussed the business venture with them, and ask some questions to better determine whether you could work with them. From there, you can narrow your search and have subsequent conversations with those on your “short list” until you determine who is the right candidate.
If you are not able to find the right business partner, do not feel pressure to “settle” for someone you are not totally sure about. If there are no suitable candidates, you would be better off looking at other options.
For example, a skill or expertise gap could be filled by hiring the right employee or independent contractor. Or to go a step further, it often makes sense to outsource a particular area of the business to skilled professionals. Many owners do this with payroll and taxes, digital marketing, and other business tasks that require specialized expertise.
Work With an Experienced Business Broker: Whether you decide to take on a partner for your business or not, one professional who you want on your team is a local business broker. Business brokers help buyers by matching them with businesses for sale that fit their criteria and skillset. They also work closely with buyers throughout the process to help ensure a smooth transaction.