05 / 08 / 2020

Is it more preferable to become an investor or a business partner?

Business partner versus investor - what is the difference? Which position generates higher profits? In most cases, investors and partners play two separate and different roles in the organisation.  Before answering this question, one should start by defining tasks and distinguishing these two concepts.

A business partner is a person who performs an essential function in maintaining, managing and establishing a successful enterprise. They are creating value, both own, and company’s by moving the business forward. A partner may invest either capital or time for their ownership and actively participate in the functioning and strategy of the firm.

An investor is an individual or group of people whose task is limited to providing capital to the company in anticipation of future financial return. They can, accordingly to their preferences to take up a passive role and allow other people to run the day-to-day operations.

 

What is more convenient?

The answer to this question involves many considerations. It all depends on the amount of capital in the form of time and willingness of a given person. When you want to become a partner in an enterprise you have to meet several conditions.

The future partner should possess the following:

- professional qualifications - being a partner you must have appropriate qualifications and knowledge about the operation of a given field.

- time - a person wishing to become a partner must take into account that they will most probably have to take active participation in the functioning of the company. It involves a considerable investment of time.

- ability to foresight - a partner must be able to identify the most appropriate solutions for the company and participate in creating its strategy for the future.

 

On the other hand, an investor:

- financial resources - should invest capital in the development of the company.

- gives up control - investors usually do not take an active part in the functioning of the company, but count on other people.

- less risk - the investor is responsible for the company's liabilities only in the amount of their own contribution.

Everything depends on how much time and skills you want to devote to the particular organization. When you invest, you are less involved in the company's activities and strategy, and you only count on profit. As a partner, you can also expect a return, often higher, but it would be obtained solely by sacrificing your time and effort.

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