In Building the Business 101: We Decide to Merge Veena A. Kutler and Annette F. Simon talk about an option that not many type A entrepreneur personalities would consider. They merged with another firm to spread costs and enable them to focus on their business. The obvious question is if large companies can do it why can’t you?

One thing Kutler and Simon did was make sure that both firms were compatible in their business models. This step is necessary early on but may or may not be necessary as the resultant firm grows. From what I have seen in successful partnerships is that people start to own certain areas. You end up with a rainmaker (marketing) a planning person an IT person etc…

You need to ask yourself a couple of questions before you consider this. The hardest of these is am I willing to give up some control? If a decision does not go my way how will I handle it? Then there are some easier questions: If there are an even number of partners, what is the tiebreaker for decisions? However the most important decision to ask is: What am I trying to accomplish by merging?

In the article, it is pretty clear that they are trying to do some cost spreading. Rather than one receptionist for two partners, they spread it to four. The same holds true with back-office staff. This kind of cost spreading can be very effective and may eliminate some redundant headcount. Lets not forget the advantage of having extra heads on complex planning cases either.

One thing that the article did not mention is software licensing, you may be able to start using Microsoft MOLP to reduce the costs of software purchasing. This program is for businesses with 2-250 computers. It’s a pretty good deal once you get into it. You can also get into the Dell small business program and get discounts on computers.

All these things are positives, but there are negatives as well, the biggest being loss of control. Any partnership can be difficult, and you need to ask yourself if you are willing to split the decision making. When you are talking with your prospective partner make sure you talk about boundaries. If there is a piece of authority you cannot give up? If so you need to make sure it’s clear how it will work. I would even go so far as to say make sure its in the partnership agreement.

In the end it is of course a personal decision. You sacrifice control but you gain cost mitigation as a result. I would say if your personality can handle it then you should really go down this road. Explore possible partners but make sure you interview them very well.