When you’re setting up a business partnership, there are plenty of things that people will tell you. They may tell you to be the minority owner, so you take on less risk, or they might tell you that you should find a partner with similar skills as yours.
Don’t fall for these or other myths about partnerships. Here are three myths and the truths that you need to know.
A business partner has less risk as a minority owner
A minority owner is going to be 100% liable for anything the business does, just like any other partner. That means that if your partner makes a mistake, you could end up being liable for it. You won’t be 50% liable. Instead, you’ll be totally liable.
Having similar skills is best in a partnership
This really isn’t true. Though some shared skills may be required, having varied skills can make a partnership great. You may want a partner who is good with sales and marketing if you’re good at finances and operations, for example.
Employees will work harder when they become partners
You might think that sharing ownership with employees splits up the burden of running a company and makes others work harder, but that’s usually not the case. What this does is increase liability and the risk of people who feel too burdened by the company to continue. Alternatives, like profit sharing, may work better than bringing on new partners.
These are three myths about businesses that you should be aware of. Be cautious about who you work with as a partner so that your business can be successful.