There are many reasons why it’s beneficial to go into a partnership with another person, but the best is the leverage each partner brings to the business.
People have different levels of thinking, creativity, money and time. By harnessing and combining these things, we create momentum and exponential opportunities.
We should not get into business because we like someone (although it helps if we do), or because they are a friend or relative and we need staff. We should get into business with people who have different skills (as well as shared values and objectives).
Legendary investor Warren Buffett leveraged investment partnerships in the early years of his career. He took capital from people who trusted him and invested their money, along with his own, in various enterprises. This is money leverage.
The partnership between Bill Gates and Paul Allen was also highly successful and founded on leverage. Both men had different abilities and went into business together to co-found Microsoft. This is skill leverage.
I was involved in a retail partnership that traded seven days a week. My partner and I had alternate weekends off. This is time leverage.
Often, professionals start partnerships with their colleagues to leverage the use of support staff. This benefit can quickly disappear as each of them grows their revenue and the practice needs more support staff. However, lawyers and accountants with different specialisations who enter a partnership can provide additional services to their clients, without having to refer them externally.
When thinking about going into business with other people, we should remember the words of Aristotle, who said: “The whole is greater than the sum of its parts.”
If we cannot see the whole being greater, we should not enter the partnership.
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