How to choose the right business partner
There are many successful partnerships in business. When two or more people get together to do what they are committed to achieve, often magic happens. Microsoft began as a partnership between Bill Gates and Paul Allen. Hewlett Packard started as a partnership between William Hewlett and David Packard. Many success stories are written by partnerships between friends, brothers or relations.
On the other hand there are many partnerships that have failed due to misunderstandings, dishonesty, lack of shared vision and commitment. A partnership is a long-term covenant between two or more people. You will look for a partner who will approach your business with the same level of enthusiasm and commitment that you have, but who also shares the same business “parenting” philosophies.
When choosing a partner, be coldly objective. Try to evaluate potential partners without regard to emotional ties or just ‘friendship factor’. Draw up a set of criteria that you’re looking for and simply judge how well a potential partner lives up to it, Think about the skills you need in a partner and the personality traits you can and can’t work with, and dig for answers to those types of questions before you take the plunge into business. Most importantly, pick someone who is as excited and as driven as you are to make this business idea a success.
If you are thinking about entering into partnership with a relatives, friends or acquaintances, please pause for a while and ponder over the matter with cool and unbiased analytical thinking and see how many of the following nuts and bolts you both possess:
1. Shared vision.
Always find a partner that shares your values, entrepreneurial spirit, and vision for success. You will need to be able to communicate effectively with your partner to make decisions, set goals, and drive the business forward. If you partner with someone that is reluctant, combative, or unable to consider your viewpoint it will be harder to be successful in business. Your goals must synchronize. Make sure you are on the same page or find another partner.
2. Complement each other.
Find a partner who can complement you with their skills, expertise and experience to the business. Your weakness can be balanced with the strengths of your partner. No single person is a master of all things in business. If you have great interpersonal skills but poor business finance skills, consider a partner who understands business accounting. Do a SWOT (Strengths, Weaknesses, Opportunity and Threat) analysis and assign roles based on each other’s strengths. Clearly define the function each of you will fulfill in the company. This way, you’ll have clear definitions for what each of your roles and contributions will be within the business. Stick to what you know, and let your partners take charge of what they know and are good at. When selecting your business partners, align yourself with partners who have complimenting skill sets.
3. Find a resourceful partner.
It is great to have a business partner that has financial resources, but there are other contributions a partner can bring to the business that can be just as valuable. A partner with a strong business network, industry connections, client list, or certain credentials and expertise can also increase the value of your business and improve your chances for achieving long-term success. Choose a partner who is financially stable. Whether or not your partner contributes financially to the business is less important than if your potential partner is in dire financial straits. Someone in the middle of a financial crisis may not be the best choice to go into business with for a variety of reasons. Money, asset, and time management skills are critical for small business entrepreneurs and someone who has grossly mismanaged their personal or business finances may not have the skills or discipline to make a business partnership work. Worst case scenario, they may even look for ways to steal from your business to solve personal financial problems. Therefore review your partner’s personal financial situation. You need a partner who has a personal reserve of cash on hand. Otherwise, he will expect a steady check every week from the business which may place your company at risk. Don’t go into partnership with someone who doesn’t put money, or something of equivalent financial value, into your deal. An equal capital commitment decreases the chances of a partner suddenly walking away from your business, leaving you with all the responsibilities. Always try to share financial commitment. Ask these questions. Will your partner add value? Does he/she have a skill that you are lacking? Do they bring in enough value to the table? If not, then perhaps you should start the business on your own and just hire your pal as an employee.
4. Business ethics.
Only enter into partnerships with someone you can trust. Look for someone who values honesty and practices good personal and business ethics. A poorly chosen business partner may end up stealing from the company, taking your ideas or clients to start their own business, or breaking laws that could get your business into legal trouble. Ask yourself these questions. Does your potential partner have the same work ethic as you? If you come to work every day at 6 AM and stay until 6 PM, don’t partner up with a 9 to 5’r. There will be animosity, and the end result will be failure.
5. Mutual Respect.
This is an important element in forming any kind of relationships and the most important one in business partnerships. You should never partner with someone that you do not respect. The main purpose in forming a partnership is to achieve success as a team. You may not value the opinion and efforts of someone you do not respect at least on a professional level. You also want to partner with someone that will show you respect as a partner, business professional, and as the co-founder of your business. You could consider these above points before going in partnership with your friend or acquaintance.
On the other hand, if you are choosing a complete stranger as your business partner, make sure that do not rush into things. Take your time. You can’t get to know someone in one conversation, or even in several conversations over three or six weeks. It may take months to thoroughly understand and professionally vet another person, but the more you can discuss up front, the better. Starting your company a few months later than planned will be worth it if you are able to make a better choice of partner. When you engage in partnership with total strangers or newly acquainted individuals; go ahead and do a complete background check on your potential partner. You should know whom you are going to associate with. All potential partners should submit to a background check that will turn up any past dishonesty, substance abuse problems, or criminal violations before they go into business together. Each should also provide a list of professional and personal references the other can talk to before entering into any agreements. Partners should be forthcoming about their financial situations, creditworthiness, assets, and debt. Remember that mutual transparency leads to growing trust. Always have a legal agreement while entering in partnerships. Whatever agreement you come to, put it in writing in a formal partnership agreement. A lawyer can help you build important information into such an agreement, such as how the work will be divided, what will happen if more startup money is needed, and how decisions will be reached. Good luck partnering.
Business is an interdependent creative process of collective and joint efforts of many people. Partnerships make the core team in every organization.