How To Choose Business Partners
A business partnership is a long term agreement between two or multiple individuals. Ideally, it allows two or more people to exponentially increase their output, add to each other’s skills and support each other as the business grows. Yet selecting a suitable business partner is more challenging than many people realize.
It is essential to form an understanding, supportive bond with your partner before starting your business or entering into a formal partnership agreement. You must be able to work with him or her comfortably. Likewise, if you are considering bringing on a new business partner after your company has been established awhile, you need to be very careful and deliberate before teaming up.
It’s easy to be seduced by the potential upsides of the partnership without considering the consequences if things go wrong. Like marriages, partnerships are usually rosy through the honeymoon phase. But people and circumstances inevitably change — and things can get ugly or even lead to divorce (i.e., dissolution of the partnership). Make sure you anticipate all possible outcomes early and take the necessary precautions.
Your goal as a business owner is to nurture your business, help it grow and become profitable. If you decide you want a partner, you should seek one who will treat the business with equal commitment, enthusiasm and fiscal responsibility. He or she must share your long-term philosophy for the business. You must have personalities that, if not similar, are at least extremely compatible — because you will spend a lot of time together in both bad and good times.
More importantly, you and your partner will stake your financial lives together. As Cyndi Lauper sang, “Money changes everything.” It can bring out the worst in people, even among friends and family members. Especially among friends and family members.
With those initial caveats in mind, here are several key things to look for when choosing a business partner:
- Search for a partner whose vision, entrepreneurial spirit and values mirror your own: This is the most important trait to search for in a business partner. Do you and your partner see eye-to-eye now? Will this continue in the future, or do you envision a divergence of opinions or a clash of personalities? Are you clear on your roles and your mutual risks? How will you handle disagreements and hard times? You need to communicate early and often with your partner. You and your partner(s) become jointly responsible for setting the business’ goals, making big and small decisions and guiding the business forward. Partnering with someone who is at odds with your viewpoint, work style and personality may affect your business negatively.
- Look for a partner who brings experience and complementary skills to your business: An ideal business partner will have skills that complement and support yours. For example, you may have excellent interpersonal skills, but fall short when it comes to organizing and managing projects. A task-oriented partner may be adept in these skills. The business will expand faster as you bring more applicable skills into the fold. Often, you find the best partnerships include a partner who is “externally” strong (with sales and marketing, or overseeing the overall direction of the business), while another is stronger “in-house,” taking ownership of the internal operations of the company on a day-to-day basis.
- Take your personal lives into account: It is a mistake to select a partner who has a tumultuous personal life or too many commitments. Remember that successfully running a small business takes a huge amount of energy, focus and time. If your partner is burdened with personal problems or cannot devote enough time and/or money to the business, you may find yourself shouldering an unfair share of the responsibilities. Worse, you will begin to resent your partner and regret getting involved with him or her in the first place.
- Your future partner must provide credibility and resources to the business: Does your partner have the right resources and track record to support the growth of the business? Have you verified this yourself, or are you going out on a limb based on what they are telling you? An ideal partner will have a robust, proven business network, client list, connections to the industry or perhaps credentials specific to your industry. These will go a long way toward improving your chances for success. Be rigorous and thorough in checking their references.
- Select a partner who has exceptional business and personal ethics: Make a deal with someone you can implicitly trust. Search for a person who values honesty and has both sound business sense as well as good personal ethics. A partner without such characteristics may steal from the company, spend money indiscriminately or steal clients and ideas. Immoral partners can also sink your business into a morass of legal trouble.
- Search for a financially stable partner: Your future partner should not struggle financially. There are a number of reasons why someone impacted by financial issues may not be the best choice as a business partner. A person who is unable to manage his or her own finances cannot be expected to run the finances of a business efficiently. Especially in the early weeks and months of a business, times may be lean — with more money going out than coming in. Can you and your partner take care of your financial needs while growing the business? You do not want an imbalance, where one partner winds up carrying another.
Finally, remember to partner with someone you truly respect. It will go a long way toward your success as a business team.
Originally published at Go For Launch.