How to Know When It’s Time to Bring on a Business Partner

Running a design firm on your own can be both rewarding and challenging. You get to make all the decisions, but you also bear all the risks. At some point, you may feel like you’re juggling too many balls and that you could benefit from someone else’s expertise or support. When your firm enters this stage, it might be time to consider bringing on a business partner. In this post, we outline when it makes sense to bring on a business partner and when another option might be more appropriate. Whether it’s a co-founder who shares your vision or an investor who brings capital and connections to the table, choosing the right partner can take your business to new heights. Let’s get into it!

When to Bring on a Business Partner as a Firm Owner

You’re thinking about bringing on a business partner, but is it really the right time? The first thing to consider is whether you have enough work or opportunity to justify hiring another person. 

Do you have more clients than you can handle? Are there areas of the business that are being neglected because you simply don’t have the time or skills to manage them? Bringing on a partner can help lighten the workload and bring fresh perspectives to the table. 

However, it’s essential to ensure that your business is generating enough revenue to cover the costs associated with bringing on a partner. Once you’ve determined that there’s room for growth, think carefully about what kind of partner would best complement your strengths and fill any gaps in your skill set. 

Let’s delve deeper into when it’s appropriate to bring on a business partner — and when it isn’t. Here are a few circumstances under which bringing on a business partner makes sense. 

#1 You’re Starting a New Service Line and Need Someone with Applicable Expertise

One situation in which bringing on a partner might be appropriate is if you’re starting a new service line and don’t have the necessary skills or knowledge to make it successful. A partner who has experience in this area could bring a different perspective to the table and offer creative ideas that you haven’t thought of before. 

They might also be able to provide access to assets or opportunities that would otherwise be out of reach for your small operation. However, it’s essential to carefully consider any potential partners before agreeing to work together. You’ll want to look at their track record, willingness to share control and responsibility, and long-term vision for growth before making any decisions. 

Ultimately, choosing the right partner can be key to growing your business, increasing its value, and realizing your shared vision for success.

#2 You Need Capital Investment

Some firm owners bring on business partners because they need capital investment. You may have a great vision for your firm but need more funds to make it a reality. Selling partial ownership to a partner can provide necessary funds, but there could be ramifications. 

Capital investment refers to the money that investors provide to businesses in exchange for shares of the company. This can come from personal assets or external sources such as venture capitalists or angel investors. 

Accepting capital investment also means giving up some control over your business. In some cases, you will retain decision-making power, but in others, you will dilute your control. You must carefully consider the terms of any agreement and ensure that it aligns with your long-term strategy and goals. 

We typically warn against taking on a partner if you need a quick cash infusion. Unlike minority investors, partners have a controlling stake in your firm. Trust, compatibility, and shared values are key when entering into a partnership, so be sure to choose someone with a similar vision. Consult with an attorney to ensure ownership is divided as you wish.

#3 You Need to Fill Gaps in Your Skillset

Next, consider gaps in your skillset. These are areas in which you struggle but where a partner could really shine. You may be great at sales and marketing but struggle with managing finances or technical aspects of your product. A business partner who excels in these areas can complement your strengths and help grow your company more effectively. Finding someone who shares your vision, values, and willingness to work towards shared goals is paramount.

#4 You’re Seeking Stability

Some business owners choose to bring on a partner instead of hiring because there is a certain level of stability in that arrangement. With a partner, you have a legal agreement. This can provide more stability for your firm than simply hiring someone who might move on. A partner has skin in the game. Of course, it’s essential to remember that stability comes at the cost of profit sharing. 

#5 You’d Like to Expand Your Network

Another compelling reason to bring on a business partner is to expand your network. As an entrepreneur, you may have started out small and built up a strong foundation for your firm. But as you start to scale, it’s essential to broaden your reach beyond your current circle of contacts. 

A business partner can help you do just that. By bringing their own set of skills, experiences, and connections to the table, they can open up new doors and opportunities for your company. They might introduce you to potential clients or partners, give you access to resources or knowledge that you wouldn’t have had otherwise, or simply provide a fresh perspective on your business strategy. 

Moreover, having a business partner by your side can make networking less daunting and more enjoyable. You can attend events together or divide and conquer. By leveraging each other’s strengths while networking in concert or separately, you build a stronger brand for your firm. Ultimately, expanding your network through a strategic partnership can lead to increased visibility, credibility, and revenue for your business. 

#6 You’re Ready for a Fresh Perspective and New Ideas that Compliment Your Own

Growing a design firm is no easy task. It requires countless hours of hard work, dedication, and patience. At some point, you might feel like you’ve hit a wall. This is when bringing on a business partner can be incredibly valuable. 

A fresh perspective from someone outside of your inner circle can provide new ideas and solutions to problems that have been plaguing your firm. They might even be able to help a stale business scale. The beauty of having a partner is that they bring their own unique experiences and expertise to the table. They may see things in a different light and offer perspectives that never occurred to you before. 

With two heads working together, you’ll be able to tackle obstacles with renewed energy and creativity. If considering a partnership, be sure to pursue someone with a different perspective to ensure a diverse, ever-evolving collection of ideas. 

#7 You Want to Share the Risks of Running a Business

Though a partner will share in the profits of your firm, they will also share in the risk if you opt for a general partnership and not a limited partnership. You no longer bear the entire financial burden of keeping your firm afloat. By partnering with someone who has a different set of skills and connections, you can also reduce the risk of failure.

#8 You Want to Be Able to Take Time Off!

As a firm owner, you might consider bringing on a business partner to provide some semblance of work-life balance. Running a business can be all-consuming. It’s easy to get caught up in the day-to-day tasks and responsibilities, leaving little time for anything else. 

But what if you want to take a vacation, attend your child’s school events, attend a conference, or spend time with friends? This is where bringing on a business partner can make all the difference. If you choose an active partner instead of a silent partner, you’ll have someone who knows your business inside and out and can handle any issues that may arise.

Reasons NOT to Bring on a Partner

#1 You’re Afraid to Run the Firm on Your Own

By bringing on a partner, you will probably dilute your ownership of and control over the business. If the only reason you are considering a business partner is that you are afraid to run the firm on your own, step back. Don’t let Imposter Syndrome trick you into bringing on a business partner. 

As Cenkus Law’s founding partner Brett Cenkus notes in an article for LivePlan, bringing on a business partner is one of the most significant decisions any firm owner can make. Cenkus warns owners to  consider their relationship with a partner”‘ as intentionally as they would consider a life partner.'” Don’t give up equity and control out of fear that you can’t fulfill your vision for the firm’s future. 

#2 Employees Would Be Able to Fill Existing Skills Gaps

While bringing on a business partner can reduce risk and add value, it also means splitting your firm’s profits and making a long-term commitment to one person. If an employee could fill existing skills gaps, it might make more sense to hire instead of partner. 

#3 You Need a Quick Cash Infusion

As noted above, we typically caution against bringing on an active partner if your sole goal is a quick cash infusion. Consider a silent equity partner instead, or apply for a loan! With the latter, you’ll receive the money you need without giving up any control or ownership.

Final Considerations: Ask These Questions Before Bringing on a Business Partner

• Do you want an active managing partner or a silent financial partner?
• Does your partner have good connections?
• Can they contribute financially? How will they continue to contribute financially? 
• Will their credit score negatively impact the business’s creditworthiness?
• Can the business afford their salary and benefits?
• How will you handle dissolution?
• What percentage will they own in the company?
• Will they allow you to check references?
• Are they comfortable deferring to you if the partnership is less than 50-50?
• Would they be open to a trial period?
• Are they as committed as you want them to be, or are they working on other projects too?

Still not sure whether a business partner makes sense for your firm? Join our community for feedback from peers and industry experts who have gone through the exact same thing!