Startup & Ideas » 25 Main Pros and Cons of Co- Owning a Startup

25 Main Pros and Cons of Co- Owning a Startup

Venturing into the world of business all alone is a very risky act in itself. Even if one manages to set the stone rolling after investing a huge part of their time in sourcing fund and arranging for ways to make the business stand, there comes the job of keeping up with everything.  

A person who owns a business completely needs to take care of all the aspects of the company all by himself. Even if he manages to hire employees, they need to be supervised. One way to avoid taking all the responsibilities is co-owning a start-up.

Benefits of co-owning a start-upDrawbacks of co-owning a start-up
Lesser financial riskDifference in opinion
Dividing responsibilitiesHard to buy out co-owner
Dividing the liability of loanLiability for others mistakes
Lesser stressHas to divide profits
Need not invest all the timeNeeds to take care of partner’s convenience
Need not worry about making decisions aloneMight lack personal satisfaction
Can make up for each other Chance of being burdened with more work
Can take help from each other
Build personal relationships

ADVANTAGES OF CO-OWNING A STARTUP

  • Lesser financial risk:

Every business is risky, especially in the initial stage. The entrepreneur gives everything he has to fund the business and establish the company. From reaching out to numerous investors who would be interested to spend their money in the business idea, to putting out all the savings one has to support the business- an entrepreneur works hard to turn his dream business into a reality. He also has to take care that the hard-earned money of both him and his investors do not go to waste and they do not suffer a loss. This financial risk is halved if the company has a co-owner.

  • Dividing responsibilities:

Setting up a new company is a lot of hard work. Even if the fund has been taken care of, there are a thousand other responsibilities. An entrepreneur has to supervise every aspect of the business, which needs inhuman amount of work. But if the business is co-owned, then the one person need not take care of everything. They can divide responsibilities as it suits them.

  • Dividing the liability of loan:

Many of the start-ups fail to find investors for their business. Even if they do, the investors might not be able to fund the whole amount. In such cases, the entrepreneurs commonly take loans from banks. Once the entrepreneur has the loan amount, he is liable to repay a certain amount of money at regular intervals irrespective of how the business is doing. If two or more people co-own a business, then they are all equally liable to repay the loan.

  • Lesser stress:

An entrepreneur not only has a lot of responsibilities regarding the business, it also puts him in a lot of stress. He has look after business, take care that it does not run in loss, search for funding, repay loans as well as face external hardships. All these puts him under stress which is not favourable for both business and him. With a co-owner by the side to share business responsibilities, the stress reduces.

  • Need not invest all the time:

The owner of a start-up has humongous responsibilities. It takes a major time of his life to carry out those responsibilities. But if the responsibilities are share equally amongst the co-owners, then no one would need to invest all their time for business.

  • Need not worry about making decisions alone:

A business venture warrants the need for making major decisions. Many a times the entrepreneurs become confused or face dilemma with no one by their side to advise them. This will not be a problem for a co-owned start-up.

  • Can make up for each other:

A business person has a lot of engagements professionally. If for some reason, one of them does not make it for an engagement, the other co-owners can cover up for him.

  • Can take help from each other:

Everyone has their area of expertise. If a business owner lacks a certain business skill, then his co-owner can either help them develop the certain skill or even do the work for him.

  • Build personal relationship:

When a person co-owns a business with another person, they tend to spend most of the time together working about the business. They even build friendships that are stronger than ever before.

DISADVANTAGES OF CO-OWNING A START-UP

  • Difference in opinion:

No two persons can get along and agree with each other’s decisions all the time. They are bound to disagree at some point. When that happens for a business where two people own the business equally, it is hard to come to a decision.

  • Hard to buy out co-owner:

If at any point, the co-owners cannot resolve their difference in opinion and one of them aim to own the whole business, it is very hard to buy out the co-owner.

  • Liability for others’ mistakes:

If your owner makes a mistake in business, the consequences have to faced by everyone who owns the business. They need to take liability for mistakes that are not their own.

  • Has to divide profits:

Clearly, if multiple people own the business, the proceeds of the business go to all of them equally as opposed to having all the profit to oneself.

  • Needs to take care of partner’s convenience:

Co-owners have to take care of each other’s convenience and plan accordingly, which might end up harming the business.

  • Might lack personal satisfaction:

Because everything will not go according to one’s plan and things need to be changed to suit the convenience of the co-owners, a person might lack personal satisfaction.

  • Chance of being burdened with more work:

If your co-owner is not suitable, you might end up doing all the work while reaping only half of its fruits. One needs to take care that the responsibilities are divided equally.

While some might find life-long friendship in their business co-owner, others might not get along. Even then, co-owning a business reduces stress of both the owners and make them equally liable.

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