Investor or Partner? Choosing Your Path Forward

No business stays the same forever, and you shouldn’t hope to do so. A static business is a dead one. However, moving your company forward can often leave you facing difficult choices, particularly when it comes to bringing in additional money and help. There are two options here – you can opt to bring in investors, or you can bring aboard a partner. Which is right for you?

Investors

Investors are pretty much what you’d expect. These are people who believe in your idea enough to part with some of their own money, on the gamble that they’ll be repaid and then some. Investors typically don’t have any say in what goes on in your business. They’re just along for the financial benefits. Of course, if you choose to give them shares, then they will have some say, but small businesses don’t usually face that choice.

Partners

Partners are very different from investors. While they typically do bring cash to the table, they’re also intimately involved in running your business as well. They may have as much say as you do over what goes on within your business on a day-to-day basis. This can be a good thing, particularly if you find that you’re struggling to get everything done, or want a more experienced hand at the wheel.

Which Is Right for You?

Understand that there is no one true answer here. What’s best for you will not be right for another business. So, analyze your situation. Do you just need an infusion of cash? If so, an investor is probably the best bet, or a loan. However, if you want someone to help you shoulder the load of running your business, then you can consider bringing a partner into the mix, but understand that this can complicate matters.

Partners have a vested stake and a say in what happens, so if you’re not prepared to share control over your business, this is not a good option. You need to be willing to share ownership, decision-making and delegation depending on the arrangement you have with that partner.

That’s another point – what type of partnership do you want to form? What rights and say should your partner have? These are difficult questions to answer, but they must be. You should also take the time to have everything written out by an attorney to ensure that everyone knows exactly how things stand.