How To Choose a Business Partner
Trust and Ethics
Make an Analytical Assessment
It's Not a Mini-Me You Want
Be Compatible At the Basic Level
Check the Track Record
Agree on What You Will Both Do
Are You Balanced at the Motivation Level
Are You Balanced at the Contribution Level
Get a Good Partnership Agreement
Factor in The Grim Reaper
Have A Plan for Conflict Resolution
Consider a Trial Run
Are You Sure You Need This
Don't Rush It
Choosing a business partner can be more critical than choosing the right business to buy.
Partner = Joint ownership = Very difficult to undo.
Partnership problems can become a very big issue later on - so do your best to get this right in the beginning.
| Trust and Ethics |
Make sure that you have high levels of trust between yourselves, and that the trust assessment is built on something tangible. Just liking each other is not good enough. Have you real reason to trust the person. If there's something that bothers you about the personality, then rather disengage.
| Make an Analytical Assessment |
You need to be objective about who you choose. Draw up a list of attributes and try to qualify them. Then assess how your partner candidate meets these criteria.
| It's Not a Mini-Me You Want |
With personality, it helps to be similar and compatible. But in skills and application you want diversity. If you are a manager / financial type then your partner should be more specialised on the operational and/or sales side. In other words, complement each other. If one is creative, then the other should be practical. The excitable and emotional should be balanced by the calm and analytical. If you are shy and retiring then maybe you need a partner who is outgoing and gregarious.
| Be Compatible At the Basic Level |
Make sure that your ethics, basic values and business vision are much the same. A good way to do this is to draw up a strategic plan together - as you approach the detailed implementation you'll start to pick up differences in opinion. How serious are these.?
Another test is to decide if you really respect the other person. And would they respect you.? Performing well because you want your partner's approval is the reverse of acting perversely (and not in your own interests) because you don't care what your partner thinks. You can differ in opinions, but if respect is not there that can lead to conflict. It almost goes without saying that you would not go into business with an idiot, but how many business people consider their partners to be idiots. Something serious has gone wrong somewhere - and clearly there is no mutual respect.
Make sure you can communicate well. The style of communication and the degree of openness are very important. Finding out about problems when there is no time left to repair or rescue is a recipe for disaster. It's just as important here as in a marriage.
| Check the Track Record |
Do your own history checks. Previous employers should be called and check the employment dates. If there a big gap somewhere try and find out what was happening then. Referees will nearly always be very positive as they are offered by the prospective partner. But sometimes they may be more candid than the partner suspects. Consider using a third party agency to do the background checks for you - criminal record, default judgements, credit history, etc. But do not neglect having this done.
A quick and easy check is available online where you can observe how the person conducts themself in the social media areas. Facebook and LinkedIn profiles will give you some perspective as will general search engine probes. Look deep into the less relevant minor page results.
| Agree on What You Will Both Do |
Your functions and responsibilities should be clearly defined, committed to writing, and agreed. Reporting to one another can also be defined here.
| Are You Balanced at the Motivation Level ? |
There should be equal levels of passion, entrepreneurial spirit and enthusiasm. If you are willing to work weekends for your dream - then there will be problems if your partner is a 8 to 5 type. And when the chips are down and emergency capital or massive effort is required, then you both need to be willing and up to it.
You are checking the partner out. That's why you are reading this article. But is the partner checking you out.? And if not, then ask yourself why because (s)he should be if the motivational level, and the will to succeed, matches yours.
| Are You Balanced at the Contribution Level ? |
If you are putting in money or assets, can your partner do the same.? Should you need to provide for future capital injections - will you both have the reserves to dredge up extra capital.? Alternatively, does the partner bring special skills, technology or business introductions.?
Time is another contributory item. Make sure there is no confusion over the expectations you both have as to what is needed. One partner feeling they have no personal life due to long hours is not going to be happy with the other putting in short time. What is the partner's family life like.? Are there likely to be time competing issues.? Are there sporting or other recreational time demands evident.?
| Get a Good Partnership Agreement |
Most attorneys can help you here. The agreement should deal with all sorts of eventualities, and you should cater for exit arrangements for either party.
| Factor in The Grim Reaper |
A sudden death will not only leave you without a critical worker, but it will often present you with a new partner - the ex-partner's estate. And that partner usually wants out and you need a new functional partner. And the estate wants to sell. So you need insurance against this.
| Have A Plan for Conflict Resolution |
At some time you will need to consider how much control you will be giving up. It seems noble, equitable and fair to have a 50/50 interest, but what will then happen when you both disagree. Having nothing happen, because you are at an impasse, could be disasterous for the business. It helps to have an agreed way out, ideally written into your partnership agreement, as to how you can resolve such a situation. Maybe a business consultant or an accountant can be appointed as as referee for such situations.
| Consider a Trial Run |
Nothing will work as well as experience itself in showing you both how well you can work together. Try to see if there is a project you can collaborate on - or maybe just work together in the business for a short period to see how well it goes. Someone telling you they can control staff well, and have good people skills, will soon have that put to the test. If they think they operate well under pressure and are cool in a crisis - then you need to see if that is true.
| Are You Sure You Need This |
Considering the potential negatives of having a partner - are you really sure you need one.? Why did you think of and want a partner in the first place.? Could an employee with the right skills not fill this requirement.?
| Don't Rush It |
We said it in the beginning and we say it again. Take your time over the choice of a partner. It's a critically important decison and will have long term implications for both of you. Get it right.!
Related Resources :
Buying a BusinessHow to Buy a Business
Restaurant Internet or Online Retail Manufacturing Service
Wholesale / Distribution Service Station / Convenience Store Liquors
Conducting a Due Diligence on Buying a Business
Selling a Business
Preparing Your Business for a Future Sale
How to Sell Your Business
Determining a Realistic Selling Price for Your Business
General Topics
Financing Sources for your Business Purchase
How to Choose a Business Partner
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Anything we left out, stuff you don't agree with.? Good article, bad article.? Please give us your comments and suggestions. |
