Taking on a partner

The term "partner" implies an ownership stake in your business. In a partnership the details of compensation should be laid out clearly in a formal legal document called a partnership agreement.

Partnership compensation is typically structured based on the contribution made, and the risk assumed, by the partner. Generally, if the business' cash flow is adequate, a partner's compensation would include: a base salary, a share in distributed equity and profits, and/or a combination of these.

People take on partners for several reasons, including the acquisition of additional capital or specific technical or business skills. Partnerships can work beautifully. However, experience requires the recommendation that all other alternatives -- a loan, investor capital, additional employees, outsourcing -- be pursured before taking on a partner.