Taking on a Business Partner
Many designers have satisfying and successful careers as sole practitioners or the sole owners of their firm. At some point, however, you may want to consider bringing a partner into the business. Depending on your business objectives, you may want a partner who can bring more capital, business or connections; who can add a new specialty area to the business; who complements your skills; or who can take over some of the workload. Offering a partnership is also a way to retain a talented but restless employee.
Entering into a business partnership is actually pretty simple. Getting it right is the tricky part. Making it work to your advantage and your customers' benefit requires some hard thinking about why, what and how.
Figuring out what you want from a partnership and what you have to offer is the first step. Whom you pick is equally critical. The partner-designee should enrich your skill set and share your business and work ethics. You also have to be comfortable working this person and to feel deep down that you trust, care for and respect them.
Going forward with with a business partnership means taking on the kind of tough decisions often avoided in even the most intimate of relationships. Partners need specific answers to the following questions:
- Who's going to do what? And when is it going to get done?
- How are profits to be distrbuted and losses allocated?
- How will potential new partners be included?
- What is the life of the partnership? How can a principal quit the partnership? What if one of the partners dies?
You will want to work with a team of advisors--attorney, accountant, financial adviosr and banker--to sort out the answers to these questions and make sure all parties are in agreement.
There also is the matter of how the partnership will be structured: corporation, general partnership, limited partnership, limited liability company / corporation (LLC), or "S" corporation. Each structure involves diffent kinds of liabilities and tax issues. Your advisors can help you here, too.