Starting a new business is a huge and demanding responsibility, especially in the beginning. Having someone to share the burden, encourage and just be there in the low times is a great blessing. That's where a business partner comes into play. While it is a great idea to have a business partner as a sounding board for you, it is worth remembering that your choice will greatly affect the success or failure of your business venture. So, before deciding on a business partnership, see whether you really need one and more importantly, determine your ability to flow with another person.
Tips for Choosing the Right Business Partner
If you think that having a business partner is what you and your business needs, here are some tips for you while choosing 'the' business partner for you.
- Background Check: Make a thorough check of the potential partner on personal and professional levels. It will give you a better idea on what kind of person you are going to be dealing with. A personal background check will help you to know how he/she handles relationships and a professional background check will reveal his/her professional and business credibility and work place relationships.
- Personal Stability: It is good to have a partner who is not struggling with pressing personal issues. If he/she is stressed out on the personal front, it is likely that he/she will not be able give 100% input required for a new business venture. Personal financial stability will ensure that the potential partner is more interested in making the business grow than in making money. It will also decrease the temptation to swindle money off your back.
- Vision and Objective: Your partner should be someone who believes in your pipeline dream. He/she should be able to envision your business venture the way you see it a few years from now. Objectives are the short-term benchmarks you have for the business and your partner should share them.
- Business Compatibility: While it is good to partner with someone having a different field of business expertise, it is not advisable to have incompatible business differences. The leadership styles and business dealing methods should be compatible, not necessarily be the same. You should be able to have a good working relationship with your partner, which is impossible if you are going to be at loggerheads for basic business codes and ideals.
- Complementary Skills: For the business you are starting out with, you may not be having all the required skills. Even if you did, you might not be able to give full justice to all the components at all times. So, it will be more profitable and beneficial to have someone with complementary skills and different area of expertise as a partner. This will broaden your business scope and take a load of burden off your shoulders.
- Contribution: There are less chances of a partner pulling out or being indifferent to business development if he/she has made a substantial contribution for the start-up, financially. Where this is not possible, the contribution could be in terms of resources (location, infrastructure) or a strong business network.
- Ethics and Integrity: A person who is ethical in his/her actions and carries himself/herself with integrity in life's every aspect, will not leave you high and dry without a valid reason. Also, such a person will be easier to trust and will inspire respect.
- Exit Strategy: Though it sounds pessimistic to think about failure when starting a new business, it can't be denied that every business is not guaranteed to succeed. Just as it is better to be prepared for a fall before falling off a cliff, it is better to have an exit strategy in place before reaching an impasse. One reason to do this is because, if you were to face a failure, you and your partner are not going to be clear-minded then, like you are now. Any plan you make now will be unbiased and well-thought. For an exit strategy, first decide on how far into debt you are willing to go to save a business. Then come to an agreement on how you will dissolve the business partnership if your business fails despite all the efforts you put in.
- Rain Check for Worst Case Scenario: Some other seemingly pessimistic scenarios you should be prepared for are, a partner's sudden ill health, pull out or circumstances due to which he/she will be unable to continue in the business venture. These things should be made explicit so that one partner is not left stranded alone with the entire business responsibility. Debt, divorce or death are other things you should be prepared for, to avoid having unwanted and unfit business partners in the form of creditors, divorced spouse or inheritor.
- Personal Attributes and Beliefs: Choose a partner whose personal attributes you like (even if they are not a part of your personality) and though it is not mandatory to have a partner who believes in the same things that you do, it is beneficial to partner with someone whose beliefs you would at least not look down upon.
Questions to Ask a Potential Business Partner
It takes years, often a lifetime, to truly understand a person but still there is never a surety that you know someone inside out. To help you judge a potential candidate and lay a solid foundation for a lasting and successful partnership, there are a few questions you need to get a clear and satisfactory answer for.
- What method of compensation does he/she expect and what will be fair?
- What are his/her expectations from the business venture - is it just a want or a need?
- What to do with profit - share or reinvest?
- How to manage stress and business lows?
- What are his/her strengths and weaknesses?
- What are his/her boundaries and limitations?
- What is his/her tolerance level?
- To what length is he/she willing to go to make the business venture and partnership a success?
- What is his/her contingency plan if the venture or partnership fails?
- In case of stalemate, who will have the last say and how should it be determined?
What Makes a Good Business Partnership
Every good and successful partnership has some common, tried and tested hallmarks. Making them a part of your business partnership is coming one step closer to success.
- Common Ambition and Goals: Being motivated in the same way for common goals, plays a very important role in the success of a good partnership.
- Dedication and Commitment: When partners in business are equally dedicated and committed to a vision, it becomes relatively easier to overcome business lows and personal disagreements.
- Open Communication: Straightforward, truthful and timely communication in a partnership leaves little room for misunderstandings to fester and thus, makes partnerships a success.
- Well-defined Roles: Knowing what is expected of each partner avoids confusions, appropriates responsibility of business decisions correctly and facilitates smooth functioning of a partnership.
- Mutual Trust and Respect: Honesty and clarity in business dealings of everyone in a business partnerships increases the mutual trust and respect, while the partnership becomes a joy and solace.
- Regular Review and Assessment: Regular reviews of business goals and partnership status along with assessment of what the partnership has contributed to the overall business development, is essential for the health of a good business.
- Effective Conflict Resolving Tactics: Settling disagreements amicably or reaching a consensus are two things that are needed to steer clear from rifts and ugly conflicts.
- Right Attitude and Personality: There is little room for ego clashes and wrong, disruptive attitudes in a good partnership.
- Mutual Understanding and Support: A good partnership is characterized by the ability of the business partners to understand each other and being a pillar of support in tough times, despite the differences among them.
- Written, Legal Contract: Even if you trust your partner, put every little thing you decide and come to an agreement about, as a written clause in a legally binding contract. This is especially applicable in case of family members, close friends and relatives with whom we intend to make 'undisclosed promises'. If these hidden expectations are not met (which is what usually happens) it turns business partnerships and personal relationships, bitter. Another advantage of a partnership agreement is that it increases the liability of fall out of a business partnership.
Being part of a good business partnership, while making a successful business, takes a lot of effort, and a wrong choice of partner will be harmful for your business as well as stressful for you. So it becomes imperative that the choice of a partner should be prudent and one which you will not have to regret even if, unfortunately, your business fails. On the brighter side, there are quite a number of successful partnerships in the business world, which can be wonderful sources of inspiration for you. Business partnerships of Steve Jobs and Steve Wozniak (founders of Apple), Larry Page and Sergey Brin (founders of Google) and Domenico Dolce and Stefano Gabbana are just a few examples of famous business partners.