All Insurance Professionals

The process of starting a business is not for the faint of heart. Long hours and low pay are pretty much the norm for every aspiring entrepreneur. I’ve read before that the founder of WordPress slept only a few hours a night for an entire year while he was coding out the WordPress project. During my first business venture, my partner and I pulled plenty of all-nighters, but I think we must have set some unofficial record the time we worked 40 hours straight in an attempt to meet a critical deadline (which we met!).

The heavy financial stress and difficult setbacks that are bound to be a part of the startup phase of your business are often best experienced in company with other people. In other words, there are definite advantages to assembling a team of partners in a new business venture.

The Pros

As stated, the major advantage to having partners on board during the startup phase of your company is that you will not be alone. That in and of itself could be the difference between success and failure. First of all, a lack of capital is often the leading cause of new business failures. By taking on partners in the early phase of your business launch, you will have a much larger financial cushion. You can reduce your overall financial risk considerably by taking on additional partners.
Another priceless advantage to having partners relates to workload. Oftentimes, a major key to success for startups is an ability to get to market as quickly as possible. If you have a partner or several partners in your business, then you will logically be able to do much more work in a much shorter amount of time, assuming that team synergy is in place. Forex brokers are one type of business that has grown substantially in recent years.

The Cons

When I started my first company, I will never forget a conversation I had with a successful businessman. He told me, “Be wary of taking on partners. There will undoubtedly be a weak link, and once you sign contracts regarding ownership interests, those decisions cannot be reversed.” When I heard this, I was too optimistic and naïve to believe that any of my potential partners would fall short of my expectations of what they would do, and I went ahead and took on 4 partners in the startup phase of the company. 1 of those partners ended up being unable to handle the workload he needed to, and it created a very difficult situation for the other partners. Moral of the story—once equity and ownership interest in a forex traders company, or any type of company, is decided in a formal contract, it is done. Make sure you are 100% sure before you make that decision.

A way to work around this is to offer your partners accruing ownership interest over a multi-year period based on performance metrics. For example, let’s assume you speak with a potential partner and you agree with him that he is worth 10% ownership in the company for reason X, Y, and Z. Consider not giving him that 10% right away. Instead, perhaps he will receive 2% now. The other 8% will be distributed evenly on an annual basis over the next 3 years, but the partner has to meet clearly defined performance measures in order to earn that ownership interest. This protects you from taking on a partner, issuing ownership interest, and then having the partner fall short of your expectations.