Tips to Find the Perfect Business Partner
It can be incredibly difficult to begin a business alone. Many entrepreneurs choose to create a partnership in order to have someone to share the load that comes with beginning a business – issues with start-up, funding and product or service issues. In a recent survey by Inc. of 500 current CEOs and entrepreneurs, one of the most common mistakes made by individuals starting a business was choosing the wrong business partner or employees. This mistake was second only to the business having a lack of capital.
So why do so many people struggle to find an ideal business partner? And what can you do to reduce the risk?
Why Consider A Business Partner?
People consider working with a partner for a variety of reasons. The great thing about a business partner is that you can usually work with someone who complements your own skills – for example, if you’re very shy, you may look into working with someone who can be the spokesperson or salesperson for your fledgling business. If you’re a great communicator, but aren’t fantastic with finances, you may look to work with someone who is comfortable with running the numbers. It’s an opportunity to evaluate your weaknesses and find someone with compatible strengths. Having a business partner may also help you to lighten the large time commitments, risks and stresses commonly associated with creating and maintaining a new business.
The decision about whether or not to enter a business partnership is a very personal one – some budding entrepreneurs will see the benefits, while others will be determined to tackle a business alone. But if you are considering linking with a business partner, there are a few key factors to think through.
Consider Your Needs:
As mentioned, a business partner is a great way to fill gaps in your knowledge, skills and abilities. When looking for a business partner, ensure that you don’t just pick someone who you’ve had some interesting conversations with, or you think would be good fun in a business. Ensure that they offer you something that you require in order to improve your business – someone who’s perhaps more creative or organised than you, for example. “If they’re similar to you, it might be more comfortable, but it may not be what you need,” says William M. Moore, a lawyer specialising in entrepreneurial business partnerships.
There’s no doubt that building a business is an investment in both time and energy. It can also be a huge strain on the finances of the business owners. If you’re looking for a business partner, ensure that they are in a somewhat stable financial situation – without large commitments to house repayments, legal costs or anything else that may reduce their ability to contribute to the business. For many new business owners, they are unable to pay themselves a salary until they begin to build a client list or sell products – so do whatever you can to ensure that you and your business partner would be in equal financial circumstances.
Starting a business requires a large level of commitment – for the person who has thought of the idea, or created the service or product on offer, it isn’t difficult to devote their time and energy to the success of that creation. However, if you’re bringing a business partner into your idea, you need to ensure that they are as enthusiastic and excited about what your business will offer to the general public. The excitement of beginning a business can be quickly overshadowed by the daily grind, so look for someone with equal passion and drive. In addition to this, consider if they’ve asked you questions about the idea or your business plans – if they’re interested, they will likely have several queries about your proposed plan or products.
Get to know your potential business partner – are your personalities compatible, or will you be likely to argue unnecessarily? How are they likely to react in tough situations? There are often situations where small start-up businesses have to make difficult decisions and it’s a good idea to evaluate the way in which your potential business partner will approach these decisions or circumstances – will they take action that you would agree with? You’ll need to be comfortable with their actions before beginning a business together.
Exercise Caution with Personal Relationships:
The Inc. survey showed that 77% of the entrepreneurs, who started their businesses as partnerships, did so with a close friend or family member. Business creation and growth is a stressful situation to put any relationship through, so consider carefully if you’re willing to risk the friendship for the health of your budding business. There are times when you’ll need to be brutally honest about a person’s abilities, strengths and weaknesses – consider if you would be able to tell your good friends the truth about their work, at the expense of their feelings. If not, it may not be wise to enter a business relationship.
Legalise Your Agreement:
If you do believe you could work with your close friends or family members, or you’ve found a business partner or financial backer through your networks that you believe is the right fit for you and your budding entrepreneurial enterprise, then congratulations! But the next crucial step is to ensure that you create binding legal agreements in relation to the management of the business and its future assets, just in case anything does go wrong, or for some reason you or your newfound business partner are looking to remove yourself from the business. It reduces the risks as the business grows for both parties.
There are many tips here, but with a few careful considerations you are highly likely to find a great business partner for your newfound venture.
Have you been through a situation where you’ve tried to find a business partner? What advice would you give to someone looking to create a business? I’d love to hear your thoughts or tips.
This article was written by Simone Ball on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Investopedia, Entrepreneur , Fast Company, Entrepreneur , Inc. and BBC.