Challenges of Partnerships

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Bringing on a cofounder has many advantages.

There are also disadvantages.

Here's a list of challenges with partnerships:

Decision making.

Partners bring the challenge of making decisions.

It's best to decide who has the final say in all decisions to avoid a stalemate.

Liability.

Both partners are liable for the debts of the business.

Profit share.

Partners share the profits, so it's best to figure out how it will be divided.

Business continuity.

The business may falter if one of the partners cannot continue.

Set up a plan for what will happen in the event that one or the other partner drops out.

Risk.

The partners may perceive risk differently, with one who may be a risk taker while the other is risk-averse.

Expertise.

While two partners are better than one, that still may not be enough for the business to achieve success.

Exit strategy.

It's best to determine in advance how the business will achieve an exit and how much each partner receives.

Consider these points before setting up a partnership.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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