We all know that starting a business can be an inundating task, but if you’ve decided to go into business with another person who in essence becomes your partner in the long haul, then these are a few essentials qualities on what you should be looking out for before signing on the dotted line.
Without much ado, let’s get right into it.
- Common vision and entrepreneurial spirit: You and your ideal partner’s long terms goals for the company should be similar, as well as your work ethics. You should also aim to understand what their expectations are on the time they wish to dedicate to the business. You don’t have to spend the same amount of time, but it is important to be aware of each other’s expected time commitment.
- Complementary skills: Look for a partner with different skills, this would help with division of labour and adequate coverage of responsibilities and an efficient working schedule. For instance, if you’re creative, you might need someone who knows how to manage a business or someone who knows the market and has contacts in the industry. These variant skills complement each other and it is integral to establishing any business structure.
- Ability to listen: Your potential partner should be able to compromise, but also have the strength to disagree on tough financial issues and personal matters that might impact the business. Also, there should be mutual respect, and good communication is important to avoid misunderstandings which may result to grudges.
- Good track record: This is an important point to look out for in a potential business partner. For obvious reasons, banks and investors would look at both partner’s statements and financial history before lending money or funding your business, make sure that you do as well in order to avoid nasty surprises further down the line.
- Great contacts: As they say, your network is your net worth. A partner with great contacts in the industry will help a great deal in marketing and pitching your brand to prospective clients and investors.
- Limited personal baggage: Running a small business takes focus, time and energy. While your partner might start with good intentions, if he/she has a series of personal issues or challenges cropping up one after the other, it is bound to affect the business and you might find yourself carrying the bulk of the responsibilities alone.
- Financially stable: Someone in the middle of financial woes isn’t the best person to partner with. You would hate a scenario where a partner eventually steals from the business in order to fulfil their personal financial obligations. In order to avert that, ensure you are aware of their financial status and commitments before starting a venture with them.
- Commitment: Are they as committed to the business as you are? What might start as fun and full of promises can easily change or dissipate when the strains of everyday work life arises. You don’t want a partner who’s ready to bolt at any given chance or change ship within a moment’s notice. Also, you should be aware of anything that may be going on in their personal life that might make the business a second priority.
- Behavioural characteristics: How would your partner handle a difficult situation or take on a challenge that the business faces? You should research their history or what they have done in previous business ventures. Just as you will choose a suitor carefully, you should do the same with a business partner. They should share similar values as you, after all it is a long term relationship after all!
- They should be asking the right questions: A potential partner should also want to know about your character, reliability, ethic, expectations and financial standing.You should expect them to ask the same tough questions that you’re asking. You want a partner who takes the business as serious as you do and is ready to put in the work for it to be successful.
Bonus Point: If you’ve gone through the above points and want to carry on with the partnership, you must then decide on what your partnership agreement should contain.
Here are some starter points for consideration:
- What would be the percentage of each person’s ownership? This of course will depend on what each person puts into the business.
- Allocation of profits and losses: Will the allocation of profits or losses be allocated in proportion to each partner’s ownership interest which is generally the case or otherwise? Make sure there’s an agreement on this before things go south.
- Making decisions: Can any of the partners sign an agreement with third parties on behalf of the company without getting consent from the other? When partners disagree, it can cause a halt in business operations, so decide prior to the launch of the business who’d be the captain of the ship and lead the decision making process.
- Death of a partner: What happens if one partner becomes deceased or wants to leave the partnership? You should establish a buy/sell agreement so the partnership interest can be valued and the interest purchased either by the partner or individual partners.
- Resolving disagreements: In order to avoid wasting time and money by heading to court when you cannot come to an agreement with your partner, you should include a mediation clause in your partnership agreement which will provide a procedure by which you can resolve major conflicts.
Finally, before going ahead with this new, exciting and passionate venture that you’re about to embark on, do yourself one last favour and thoroughly analyse whether you really need a partner. Indeed, you might want to consider that perhaps it may be better to hire someone to fulfil a task without giving them a stake in your company’s shares. If you’re a startup or are low on capital, then getting a partner might be best to share the workload and responsibilities. However, if you can just pay someone to do the work, then that would possibly be a better option.
Hopefully, these tips will come in handy on your journey to finding a potential business partner.
By Sewa Folie