- December 21, 2021
- Posted by: Stratford Team
- Category: Business
One thing I always try to stress to small business owners is to watch out for the Shark Tank myth.
It’s easy for entrepreneurs and small business owners to glamorize equity based on TV shows and the Silicon Valley persona, but there are some serious drawbacks to it as well. You have essentially married your new business partner, and if things go south, you could be in for a contentious divorce. The decisions are no longer solely yours, and neither are the profits.
I always urge small business owners to consider other financing options before making the decision to bring in an equity partner. For example, when taking out a loan, you know exactly how much interest you are going to owe the bank and when your relationship will end. With equity, on the other hand, there is no limit to the number of profits that will go to your new partner and no end date in sight.
Inevitably, people’s interests and needs will change over time and business partners grow apart….
