Do You Really Need a Partner to Launch A Startup?
I didn't have partners when I started my first two companies, but I did by the time I sold those companies, and I have partners in the two businesses I'm most involved with today. So I don't have anything against partnerships per se. But I disagree strongly with those who insist that a first-time entrepreneur must have a partner when starting out.
Inexperienced entrepreneurs are far more likely to get in trouble by making someone a partner for the wrong reason than by going it alone. By the wrong reason, I mean doing it because the person has a certain expertise that you lack--typically, in financial matters--or simply because you don't want to be alone.
I'm not saying that you shouldn't hire people who have special expertise or reward people who make special contributions. I also know how lonely the entrepreneurial path can sometimes be. But none of those reasons justify making someone a partner.
There is no more expensive way to finance a business than by giving away equity, although you probably won't realize it until your business succeeds. Bear in mind also that you don't really know people until you've worked with them for several years.
Giving equity to the wrong person will wind up creating all kinds of problems that will distract you from what you should be doing--namely, building the business.
NORM BRODSKY | Columnist
Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.