So, you’re thinking of going into business with your brother, your old roommate, a former colleague, or some guy you just met at a bar. What makes a good business partner? What should you look for and what should you look out for? Choosing a business partner is like choosing a spouse. You are entrusting this person to your financial investments, your goals, your time, and your future, so it is important to choose a business partner who can stick it out through the long haul, or at the very least, dissolve your partnership reasonably without a messy legal or emotional conflict.
Shared Goals and Values
Your partner is going to be a major asset in delivering the results you need as a new business owner. As partners, you should have similar goals about your target market, projections, and strategies. Take the time to write out your core values and goals, short-term, medium, and long-term. You should also have matching ideas on how to invest and growth projections. In any case, make sure to discuss the finer points of your business planning to ensure that you are on the same page.
Take a Trial Run
Before taking a big plunge with your savings or investments, try working with a potential partner first. You are going to have to know how to communicate effectively, troubleshoot and find solutions, as well as work through any personality conflicts. Take a trial run to decide if this is a person you really want to work with. You could do something small, try a volunteer project for a few months, go to a conference, or start smaller projects first. Taking the time to spend time together will inform how compatible you will be as business partners.
Solid Financial History
You’re going to want to do your due diligence here. Depending on how well you know your potential partner, you may not have a comprehensive view of risk potential. Obviously, you will want to make sure your partner has a solid financial history and background, i.e. no gambling addictions or massive credit card debt. The key here is that you will want someone who is stable and fit for business. You don’t want to get into financial trouble later because of an obvious oversight. It may seem invasive, but both partners should submit to a background and credit check. It’s only fair. And smart.
Find a Complimentary Skillset
Finding your business partner is like choosing a spouse. You don’t necessarily want to find someone exactly like you. Opposites often do attract and it could be beneficial to find someone who offsets your weaknesses and bolsters your strengths. A solid partnership relies on having different and complimentary abilities. One of you may be stronger at math and financial planning while the other has the softer people and marketing skills. It doesn’t help to have too many cooks in the kitchen and you will want to make sure that your bases are covered.
Be Wary of Emotional Ties
Starting a business with your spouse, sister, brother-in law, or best friend may sound like a good idea at the outset, but be wary of emotional ties. Prior relationships can create unrealistic or unspoken expectations. It can also make things more difficult in the event of a conflict or if your company dissolves. You don’t want to be in a position of telling someone you love that they aren’t pulling their weight. When your success, investments, and long-term objectives are on the line, you will want to look for the best business partner, not just a prior relationship.
Pick Someone You Actually Want to Hang Out With
You are going to be spending a lot of time with this person, and not only during business hours. Business trips, industry conventions, brainstorming sessions, and all of those lunches will be a lot more enjoyable if you are spending that time with someone you actually like. When things get tough, you will want to be working with someone who you respect and who can maintain a relationship with. Character outside of work goes a long way and it can make your journey a lot more enjoyable.
Passion and Self-Motivation
There are a lot of qualities that will make a good business partner: smart, reliable, and experienced to name a few. One of the most important traits you should look for is a quality of passion and self-motivation; someone with a vision and dedication to stick it through, even when the going gets tough. A lot of people have ideas and want to start a business. Not everyone has the tenacity and passion stay motivated when things aren’t working. When looking for a business partner, avoid someone who has a record of starting things and not finishing them.
Gauge the Baggage
Everyone has a personal history but you don’t want a business partner with a lot of baggage. Someone with a trail of relationship wreckage is not a promising business partner. A messy divorce, failed prior businesses, and other instabilities can be red flags. In business, personal baggage matters and getting entangled with a messy past can be problematic. The more you know about your partner, the less likely you are to run into problems down the road.
Nail Down an Exit Strategy
It’s never the most romantic part of business planning, but you should have an exit strategy with your business partner. When choosing a business partner, you also want someone who has the foresight to see down the line, even if the end of that line means dissolving a partnership. Choosing a good match also means choosing someone who can put together a solid partnership agreement and agree on the terms of dissolution.
Where to Look…
Still looking for a business partner? If you don’t already have someone in mind, consider professional networking to find a good fit. Consider people you work with or prior co-workers and colleagues. You can also check out social networks like LinkedIn, industry events, and start planting the seed in your professional community that you are on the lookout for prospective partners.