Finding the right person to help build your business idea into a successful company is harder than you may at first suppose. Many of us decide to take on a business partner for a variety of reasons; most of which seem valid and justified at the time – even crucial to the successful birth and growth of the business. Few of us have the foresight to pause and consider the long-term implications of our decisions and choices – until it is too late.
What is an Ideal Business Partner?
An ideal business partner must not only share your vision and enthusiasm for the new venture, but should also add expertise in the areas in which you lack business skill or experience. An ideal business partner should be someone who understands the legal and financial responsibilities that come with sharing a business. But most importantly, an ideal business partner must be someone with whom you get along; someone who understands and shares your vision; someone who is on your ‘wavelength’ when it comes to making crucial business decisions in the future.
The first thing you need to ask yourself is whether you really need a business partner? If the answer is a resounding yes, then consider the following carefully: by taking on a partner you are in fact inviting a complete stranger into your life and entrusting them to share the closest details of your finances and your trust. You are handing over the keys to your business to that person. You are entering into a legal and binding agreement that holds far reaching consequences for yourself, your business and your life.
Before you invite someone to join you as a partner, consider these questions:
o Do you like this person?
o Do you have the same vision when it comes to business ideas?
o Can you trust this person – is this person ethical, moral and honest?
o Is this person essential to the success of your business – is this person qualified to assist you?
o What skills, financial backing or other contributions will this person bring to the table?
o Can you envision a long-term relationship with this person – will you still get on in six months or six years from now?
Before entering into a partnership, consider the advantages and disadvantages:
The obvious advantages of a business partnership are that, ideally, you will have someone to share the financial burden as well as the workload. You will also have the input of a fresh perspective on ideas, a sounding board to bounce new concepts off, and support when the going gets tough.
The main disadvantage of having a partner is that you can be held personally liable for your partner’s negligence or bad business decisions. This means that if your partnership is unable to meet its financial obligations, you may have to use your personal assets to pay off debts, even though you, personally, may not be at fault. If the partnership defaults on a loan, for example, the bank has the right to collect the debt from both partners. Another disadvantage of a partnership is that if one partner decides to leave the business, then the business may suffer, or even end.
A partnership is like a marriage in many important ways, requiring a high level of trust; and, as in marriages, divorce is common. Here are some tips on what to look out for in a choosing a suitable business partner:
o Observe the behaviour of your potential partner; research their business history, particularly regarding a trail of litigation, financial problems or fallouts with previous partners.
o Ask yourself whether you are compatible in temperament. Do you see ‘eye-to-eye’ on most issues? Do you have a similar business vision for your new company, or do you have radically different ideas on how things should be done?
o A potential partner should bring something of substantial value to the table – for example financial backing, special skills, or industry connections. Choose someone who complements, rather than duplicates, your own skills.
o Never underestimate the importance of actually liking your partner. Remember, it’s likely that, in future, you will be spending more time with your business partner than with your spouse or significant other.