Let’s be honest, business partners, like parents and spouses, are rarely perfect and comes with their own set of challenges. Deciding on whether to take on a business partner is a very important decision that you might have to make. If you made the choice that this is the way to go in taking on a partner, the first thing to remember is to not choose a partner who is exactly like you. A truly effective partner is someone with abilities and skills that complement your own and can expand what you can do as a team. Also ask yourself the following questions:
- What do you need and expect from a Business Partner?
- What is your potential partner’s financial situation?
- Is the potential partner’s commitment to the business as strong as yours?
- Is there something in your potential partner’s family life that might make the business a secondary interest?
- How does he or she react in difficult situations?
- What is the potential partner’s standing in the community?
- Are they willing to put everything in writing?
After you have asked yourself these questions and still decide to take on a Business Partner, the following points can help you make the right decision on choosing a partner, and also if you are making this decision for the right reasons:
- Set out Vision and Values. You have a dream for your business and it is important that there is a mutual understanding between partners. You should also share the same value system. Rather than just looking at the seed of the idea, you’ll need to understand whether you are both seeing the same thing when it’s full-grown. This doesn’t mean you don’t allow room for improvement or adaptability, but it’s helpful to have a clear idea of what the goal is.
- Remember Qualifications and Skills do Count. You could choose a partner who shares your vision and passion, but doesn’t bring any real skill to the table. Choose a partner whose skills, experience and natural abilities don’t just mirror your own, but complement them in a way that makes you stronger as a team. Where you lack, they will fill in and deliver, and vice versa. Don’t choose a partner based on their relationship with you; choose a partner because you think he or she has the experience, the drive, the skills and the vision to successfully implement your business plan at your side.
- The Importance of Communication. This is the part where chemistry between the two of you actually does matter. When getting to know each other pay special attention to matters of conflicting interest and notice the person’s response to conflict. Everyone has a different way of interacting with the world and handling conflict situations but you need a partner you can communicate well with in order to move forward, take action and resolve problems. A partnership inherently implies equal say, so if someone is unwilling or ineffective at communicating, you probably won’t fare well in business together.
- “Oh, how I Respect thee…”. Never ever partner with someone that you do not respect. The main purpose in forming a partnership is to achieve success as a team. The problem comes in where you may not value the opinion and efforts of someone you do not respect at least on a professional level. Partner with someone that will show you respect as a partner, business professional, and as the founder of your business.
- Integrity does matter. Integrity is one of those values that can be seriously undermined by partners and staff alike. Decision-making based on mixed values can cause mistrust and contention.
- Stick with the roles you assign. In a partnership between two people, it’s very important to have clearly defined roles so that you can each feel great about fulfilling your end of the daily tasks. The list of duties will vary between businesses. Figure out what needs to be done then decide who gets to do it. The reason why you enter a partnership in the first place is to split up work and offer each other clarity, so clearly assigning primary responsibilities allows each party to perform to the best of their ability. Come up with titles for each person and a list of responsibilities to go with that title, for example, Creative Director and Executive Manager.
- What you give back to your business may not be the same as what your Partner will. Tensions can run high and when the going gets tough, there can be much friction around your roles. This can be avoided by setting out clear deliverables for each partner and what their contribution is to the goals of the company. Understand and respect each other’s strengths and weaknesses. Each partner’s skill should complement the other.
- Background checks…..Oh so important! You have heard the saying, “You can’t trust anyone.” By deciding to go into a partnership, you can’t take any chances. Don’t feel bad about checking into their personal, professional and legal history. It may save you money and unnecessary headaches in the long run. Set aside time to conduct a thorough background check on your potential partner. If they don’t have anything to hide, they won’t mind. If it is someone you haven’t known for very long, you will definitely want to do a background check. It may seem like a waste of time at first, but in business, you need to get into the mind set of protecting yourself and your assets. It’s not personal. They may seem like a great person, but all too often the most perfect-sounding, charismatic people are the crooks. Even if you don’t feel like doing a background check, do one anyway. You can even ask the person for references, and check them, as if you were conducting a job interview. You can also check their social media and LinkedIn accounts to see how they present themselves online. If this is someone who is going to be representing your company, you will want to rest assured that they are not totally unprofessional even in their personal life. On LinkedIn, check their recommendations to see if they are valid. You can even conduct a Google search with their name and search terms like “arrest records,” fraud,” or “scam.” Anything newsworthy with their name should show up. Use a reputable company that does offer background Checking Services for Businesses.
- And what about Financial Responsibility? If you want to make sure you and your partner are each pulling your share of the weight, and to prevent against fraud or embezzlement, make sure you’re sharing financial responsibility for the success of the company. Establish financial liability in writing. Too many small business partnerships have failed because one person decided to be irresponsible with the money. Prevent anything like that from happening by sharing financial responsibility and keeping immaculate records. Write up a balance sheet of the funding your business will need and assess your potential partner’s capability of meeting your contribution.
- Black and White. Once you verify the person’s legitimacy and you feel confident in going into the chosen partnership, the smart thing to do is to get everything in writing. Too many partnerships find themselves in trouble because they didn’t think they needed to write up documents to account for future problems that might occur. Put all business agreements between you and your partner in writing and keep those documents well marked and organized and in a safe place. Remember both Partners needs to sign. Consult with a lawyer about how to prepare and protect your business.
So he or she looks great on paper, and you’ve had enough conversations so that you feel your vision and attitudes line up and you feel confident that this Partnership will be a lasting one. But the only real why you can know is by giving it a test run.
Since signing onto a business partnership is a big commitment and responsibility, you may want to work on a project or two together before you make the final decision. It makes good business sense to suggest working on a project together before signing an agreement. Rather than attempting to judge each other, you’re just testing each other out to see if what you think is a great alignment of skills actually translates into real, practical application. Propose that your potential partner help you out with a project you’re working on, or even suggest a small project the two of you can complete together. Go at it like you would if you were in business together, and see how it turns out.