If you've been running your video business for at least 5 years, I bet you've thought about whether or not having a financial partner can help you grow. If you haven't thought about this, you should. There are many advantages to having a financial partner but there are also a fair amount of disadvantages. It's up to you to weight the pros and cons and to make a decision for yourself. Here are some things to consider before making that decision:

PROS

1. If the potential for your business is valuable enough, a financial partner's investment can pay off all or most of your business debt plus give you some cash to put in your pocket. This extra cash can be anywhere from a few thousand to a few hundred thousand. Again, depending on the current value of your company and it's potential to create positive cash flow for you and your financial partner.

2. The financial partner can help you secure a favorable business line of credit if you don't already have one, or a larger line of credit if what you currently have isn't sufficient to operate your business.

3. If their investment isn't enough to pay off business debt, a financial partner can help you refinance the business debt to get it out of your personal name and into the name of your business. This improves your personal credit which makes it easier to purchase what is needed for you and your family. Plus, you and your partner are now equally responsible for paying off the business debt which makes you equally as motivated to see your video business succeed.

4. If structured properly, a financial partner's involvement in your business can make it so that you have a guaranteed salary each month. This means you get paid whether or not the business can support your salary in any given period of time. Your partner will want to make your salary contingent on the status of your company each year so your job is still to see that sales are as good or better than when they were the day you took on the financial partner. I can tell you from experience that as soon as I had a guaranteed salary, I was able to stop worrying about my personal finances. This has resulted in a 500% increase in sales just two years after we formed our partnership.

5. A financial partner can help you negotiate the best rates on bank loans, equipment and office leases, etc. because their credit is most likely impeccible and their financial status is much stronger than yours. You'll no longer have to simply take whatever rate the bank wants to give you. The financial partner will see that you get the same deal he/she would get because they have a financial interest in your company. This alone can amount to saving thousands of dollars in financing fees each year which instead can go into your pockets in the form of profit checks.

CONS

1. Financial partners will want to stay on track of how your company is doing on a regular basis. Some partners may want financial reports every week while others may be happy with monthly reports or even quarterly reports. Whatever they want, it's up to you to either comply with this or to come up with a mutual agreement as to when you will distribute these reports and in what format. Partners want to look at the financials because it will help them decide whether or not you are properly running the business. Be prepared to explain things like why you made certain purchases, why you are paying an employee a certain amount of money and why it's necessary to finance an HD camera instead of continuing to use the SD cameras that have already been paid for. It can be a pain in the butt to constantly have to answer these questions from your partner but remember that they invested money into your company and are depending on you to turn that investment into profit. Providing reports and being held accountable for your decisions isn't necessarily a "con" to taking on a financial partner. However, if you have always run your company without any outside intervention, this may be very challenging for you. There is nothing more frustrating than being up to your ears in projects with tight deadlines when you get a call from your partner asking for financial reports by the end of the day or week.

2. Most true financial partners have invested money in several businesses. These investments make up their so called portfolio. It can be frustrating at times when you want to meet with your partner or to discuss an important matter regarding the business over the phone and they are not available. It's not uncommon to only see or speak to your partners once a month or quarter...depending on their level of involvement in other businesses. Plus, their care and attention to your business may very well be determined by how much their investment in your business compares to the level of investment they have in other businesses.  For the longest time, I used to get irritated that I could never get time with my financial partner. Then, I realized that I was a pretty small fish in my partners grand scheme. The main business he owns generates $50+ million a year and his real-estate holdings are probably very close behind that. The profit checks he gets from my video business is barely enough to purchase a new luxury car each year. So, once I determined where I fell on his chain of priorities, I was able to relax a bit more which has resulted in building a stronger partnership. I used to think I wanted him more involved in my daily decisions....but it has proven to be a blessing that he isn't.

3. No matter how successful your business becomes, your financial partner will always own the same percentage of your company based on their initial investment. If they invest $50,000 today and it buys them 50% ownership in your business, they will always own 50% until you either buy them out or they sell to another investor. Again, it's hard to say that this is really a "con" because it's easy to argue that if you didn't have their initial investment, it would have been impossible to grow your company the way you have with them on board. Nonetheless, you have to be prepared to continue to pay them their fair share of your profits, even if there only involvement each year includes analyzing your financials and collecting their profit checks. When you are the one busting your tail day in and out, it's easy to get aggrivated by this. However, remember that your financial partner was once where you are today and that they too had to serve financial partners in the same way so that they could get ahead in business and in life. You'll be able to enjoy the same level of involvement in someone else's business as you mature in your business and financial status. The one thing you must never do though is try to cheat your financial partner out of their fair share of the profit. The only way you can get the shares back that they purchased at the time of your partnership is to buy them at fair market value. There are numerous ways to negotiate this type of deal but remember that fair market value in this industry usually equals about 10 times what their share of the business is worth. (or 10 times their profit share) So, if their last profit check was $50,000, that means that you will have to purchase their shares back for about $500,000. Other factors like business debt, etc. have to also be factored in but the point I'm trying to make is that in many cases, buying them out won't ever be possible. All the more reason to make sure you choose a financial partner very carefully because odds are good you'll be stuck with them for a very long time.

All in all, I can honestly say that the pros in my own financial partnership have far outweighed the cons. My business is stronger, my family is stronger and my partner has turned out to be a great mentor as well. He does care about the bottom line of our business but I believe he equally cares about my growth as an entrepreneur and the overall well-being of my wife and children. That's the best kind of partner in my mind.

There's nothing wrong with never having a financial partner but realize that it may take longer to find success without one. If and when you choose to take on a financial partner, be sure to choose wisely. Breaking up a financial partnership is harder than getting a divorce so do your homework!

Read similar articles at http://www.MindYourVideoBusiness.com.

Kris's Background

Kristopher G. Simmons (Kris) is the President & CEO of Fire Eye Productions, Inc., a video/multimedia/webcasting production company located in Chattanooga, Tennessee. Prior to founding Fire Eye Productions, Inc., he worked as a freelance producer, director, videographer and editor for several independent video production companies throughout the southeastern United States. In 2004, he was selected as Tennessee's SBA Young Entrepreneur of the Year and over the years has won multiple Addy Awards from the Advertising Federation and 3 International Videographer Awards for excellence in video production. He currently serves on the Chattanooga Chamber of Commerce Board of Directors, the Digital Video Professionals Association Board of Directors, the Chattanooga Technology Council Board of Directors and is a member of the Chattanooga Downtown Rotary Club.