Entering into a business partnership looks a lot like a romantic relationship. At first, everything seems perfect. There’s a shared interest that brought the two of you together, and it looks like the ideal next step for your company.
However, these relationships can also turn sour in a heartbeat. If you want to avoid turbulence down the road (or even bankruptcy), follow these helpful tips before choosing a business partner.
8 Tips for Choosing the Right Business Partner
1. Build a Partnership Based on Trust
Trust is crucial to any partnership, whether personal or business.
Think about all the sensitive information a potential partner will be able to access. Can you trust them with trade secrets or the bank account? If you can’t answer in the affirmative, it’s time to reconsider.
Entrepreneurs shouldn’t be shy about asking for references. You want a partner who has a respected reputation in the industry. It’s also best to avoid anyone with a history of questionable actions or legal difficulties.
After all, you need a partner who won’t lie, cheat, or steal their way to the top, and they should be able to trust you in return.
2. Evaluate the Partner’s Role
Why do entrepreneurs team up with a partner?
In successful companies, partners each bring different assets to the table. One may be creative, while the other may be more left-brained. The two work better as a team, and the business thrives because of their collaborative efforts.
Sometimes, however, a company doesn’t need a partner. There are instances where hiring an employee would be a better option.
If you’re uncertain, contract your potential partner as a consultant first. This will help you determine how valuable their contributions are to your brand.
3. Think Twice About Mixing Business with Pleasure
Some entrepreneurs form business partnerships with close friends.
However, it’s not always a wise decision. Just because two people are friends doesn’t mean their business ideologies and values align. One person may be more work-oriented, while the other may want to go out and play.
Things get even more complicated if personal problems get into the mix. There should always be a clear line between personal and professional relationships. If one party cannot separate the two, it’s likely to cause tension down the road.
It’s not worth losing a friend to start a business. The same theory also holds true for anyone considering working with a relative.
4. Collaborate Before Teaming Up
Many people choose partners after hearing about them from others, but if you’ve never worked alongside them personally, you don’t really know if they are a team player.
That’s why it’s best to collaborate with a potential partner before making things official. Try asking them for help with an upcoming project, and see how they respond to the pressure. A trial run will help you determine if a partnership is a good idea or not.
5. Equally Divide Business Responsibilities
The best thing about a business partner is having someone else around to help get things done.
However, it’s important to delegate tasks to each person equally. After all, no one wants all the responsibilities to fall into their lap. Many adults have not-so-fond memories of school group projects. It always seemed like one person did all the work.
Ensure both you and your partner have an equal number of tasks and keep an open line of communication if one person ever needs a helping hand.
Resentment can build in unbalanced partnerships, while balanced partnerships are more likely to last the long haul.
6. Communicate About Money Beforehand
Marriages often fail because of money disputes, so it should be no surprise to learn the same happens in business partnerships. In order for a partnership to succeed, both parties need to agree on money.
Understanding how a potential partner handles their personal finances may give you a glimpse into how they will manage a business. Do they rely on lines of credit to pay the bills? Are they more of a saver?
You should also find out where they seem themselves in five years. Some entrepreneurs want to own their business for a lifetime, while others may want to scale and sell.
7. Get to Know Their Personality
Personality clashes are real. Even if a person has all the right qualifications on paper, if you always quibble about every trivial thing, your partnership will end quickly.
Now, this doesn’t mean both parties need to think the same. In fact, it’s great to have different opinions and outlooks. A few disagreements are to be expected; however, partners should get along more than they argue.
When interviewing potential partners, make sure you learn how they would handle certain situations, such as firing an employee or dealing with a difficult vendor. This is also the time to find out if they have the motivation and perseverance to manage a growing business.
8. Willing to Sign on the Dotted Line
Entering into a business partnership is a legal agreement. The right partner should be willing to work with a Business Lawyer Near Me to sign all the necessary documents. Run the other direction if they don’t want to fill out all the forms.
When forming a partnership, make sure to put an exit plan into place. Ask about a buy-sell agreement before making things official. Leaving anything up to chance is a recipe for disaster. There needs to be a clear path to dissolve the partnership if the need ever arises. Even the best team may decide to split and move on to other ventures.
If a potential partner tries to avoid meeting with a lawyer, they may have ulterior motives in mind.
A Match Made in Business Heaven
A well-matched partner may mean the difference between a thriving or a failing business.
A partner should offer value to the company, and both parties should work better together. However, choosing the right partner isn’t always an easy task. There are a lot of things to consider before taking the leap.
Taking enough time to thoroughly vet and interview a potential partner will ensure you make the best decision for your growing business.
Wishing you all the best as you go about choosing the right business partner.