Get Into Business with Partners
A view on how partnerships can prove to be beneficial especially for start-ups.
Startups often shy away from starting their business with partners. Each may have their own peculiar reasons, such as insecurity, the pain of profit sharing or cheating. It all depends upon your attitude towards your business. If you are aiming to build a small profitable business, keeping with yourself the entire pie then you may rather start alone. But you want to build a huge business requiring a pool of skills, expertise and capital it is wise to partner up. You will have only a share in the pie but the share will be quite large.
‘In any case if you are a first generation entrepreneur not coming from a business family and you are starting from scratch, it makes all sense to have a business partner,’ says Krishnan Ganesh, the serial entrepreneur, his latest venture being Tutor Vista. When you take in partners you are actually building your core team which if carefully handled will go a long way taking your business from the startup level to the IPO level.
They Bring in Complimentary Skills
The most important point why I vouch for you to start with a partner is that it is almost impossible for anyone to have all the skills required to run a business. Suppose your business is around a software product and you are extremely good at technical skills required to develop and upgrade your product. At the same time you may not be good at business development, managing finances etc. So you need extra heads to take care of these crucial areas. As Ganesh says, ‘It actually helps strengthen the relationship if partners have complimentary skills. Each one respects the other in recognition of the skill or expertise that he brings to the table.’
Investments will come Easily
If you are planning to get investment in your venture, it will be easier if you have a sound team with all the required skills and expertise required for the business. Ganesh says, ‘Go to any venture capitalist. They will ask you to show the team, who will be doing what and most importantly they will ask you who is the boss.’
Having a business partner gives you that much needed moral support which helps during the tough times of your business’s life cycle. ‘Though we have a very clearly defined professional relationship but at times we have helped each other in times of personal crisis also,’ says Shashank.
Is it Easy to get Partners?
Rope in Your Colleagues or friends
Getting the right kind of partners is not that easy given that while employees can be hired, partners cannot be brought in that way. How do you find people then? You should know them well and they should be trustworthy. ‘They can be your colleagues or friends who share your vision and are convinced that your business idea will work,’ says Shashank Co-founder Naabo Solutions. They should be willing to share the risk and making sacrifices such as the security of a well paying job.
Manage the Relationship
One of the most challenging aspects of partnership is working out the dynamics of the relationship, such as ownership issues, delegation of responsibilities and profit sharing. Ganesh tells us, ‘Ownership should be decided taking in mind what each partner brings to the business in terms of experience, contribution of capital and domain expertise. Say a technical expert is entitled to a greater share if it is technology related business. Right at the outset it is important to work out the conflict resolution system if in case there is disagreement over a certain issue and also you must decide who will have an upper hand in making the final decision if a deadlock happens.
Shashank opines, ‘While it is important to have everything documented, at the same time keep in mind that partners should not give priority to profit sharing in exact terms at the starting up stages when your priority is to build a successful business at the first place.’
When someone leaves
But what do you do when a partner leaves. Well you have to be mentally prepared for the same. ‘You must understand that when a marriage doesn’t work and both partners separate, it is good for both. They will be better off somewhere else. So it is for business. If a partner leaves, you must accept it and the remaining team must make for the loss.