Do I start a business with a partner or by myself?
As Henry Ford said: “Working together is success”, but what about working alone? Can it also be a key to success? In this article, This Foreigner Can gives guidance regarding this choice.
Working with a partner has its advantages. Concerning finances, it’s very appealing because more capital is available to run your business, as well as greater flexibility to manage it. With greater capital resources, the risk of loss is reduced.
The other advantage that should not be overlooked is the sharing of skills and knowledge. The combination of complementary skills can enhance your business, as your expertise will be diversified. Your strategy and ideas may be enriched by another point of view.
A business partnership also has its negative points. When you are working with someone, you run the risk of having disagreements if yours ideas/opinions diverge a lot. Taking a partner means adopting a global view and working to find agreements. In a partnership, you can’t take decisions by yourself. You have to consult your partner and negotiate to find a common decision.
The second step after choosing a partner is the legal structure of your business. Three choices are available to you.
The first one is the ordinary business partnership. In this business partnership, you have to share the profit and any losses that your business makes.
If the sharing of debt worries you, you have the possibility to opt for a Limited Liability Partnership. Contrary to the previous option, your debt will depend on your capital contribution in the company.
If you choose to run your business alone, don’t worry – there are also a lot of advantages. Unfortunately, there are some disadvantages too.
Let’s be optimistic and start with the advantages. The first plus that comes to mind is independence. When working alone, there is no need to work to find a compromise when making a decision; you are free to do what you want and what is best for your company. You’re the one in control and you don’t depend on anyone else. As concerns the financial aspect, you don’t need to share your profit. Your profit depends only on your work.
As good as it can be, working alone has some risks. The most important is mainly financial. Usually when you start your business, the number of resources that you have been limited and company growth can take time. In the case of debt, you are responsible and you have no one to help you to pay it off.
If you are really interested in running your business alone, there are two mains types of legal structure that you can claim.
The first choice you have been the “sole proprietorship” and is a viable option. It a simple structure where there is just one person: you. With sole proprietorship, you are responsible for the debt and the income of your company. It can be a problem because you are personally liable for your company liability.
If you want to separate your personal finance from the company finance you can choose the “limited company” structure. In this case, any profit and debt are the company’s responsibility.