I Don't Have the Cash—Partner or Borrow?

Tony writes: "I found a deal, but I don't have the cash. Should I bring on a partner or borrow the money? How do you decide?"

The reframe: This isn't a finance question. It's a control question.

Borrowing (debt):

• You keep 100% ownership
• You owe payments regardless of performance
• Lender doesn't care if the deal works—they want their money back
• Risk: Deal fails, you still owe

When to borrow: When the cash flow covers the debt and you have confidence in the deal. If you're confident, you want full control.

Partnering (equity):

• You give up ownership and control
• No payments if the deal doesn't work
• Partner shares the risk—and the upside
• Risk: You're married to this person for the life of the deal

When to partner: When you need expertise, connections, or credibility—not just cash.

Scott's story: Considered a retail strip center. Talked to an experienced partner. Numbers didn't work. Walked away. Had the numbers worked, he would've partnered for the expertise.

The diagnostic question: Do you need capital—or capital and capacity? Cash only = borrow. Cash plus expertise = partner.

The warning: A bad partner is worse than bad debt. Debt ends when you pay it off. A bad partnership drags on for years.

Treat it like a marriage:

• Get to know them first
• Written agreements
• Exit terms, breakup terms
• "You need a prenup"

The close: "They're great until they're not."

Got a business question? Ask Scott here: scotttodd.net/ask