At some point you may consider getting a business partner or co-founder. But partnering doesn’t make good business sense if you simply like the other person.
Maybe you want someone whose talents and skills compliments yours, or you want to broaden your market and client base. Many entrepreneurs join forces with a partner in order to defray costs, build creativity, and keep their sanity, notes Danny Boice, founder and CEO of Trustify; a new service that lets consumers order a private investigator on-demand to check on anything or anyone.
Whatever the reason, when forming a business partnership, just like with a marriage, there are certain steps you need to take to help ensure a happy and prosperous relationship. So, before you say “I do” to just anyone, Boice suggests asking yourself the following questions:
- Does your business partner-to-be have solid financials? A lot of people can be fun over dinner or drinks, but when it comes to sharing your livelihood with another person you must be cautious. Perform a detailed credit check to ensure there are no skeletons. Ask for detailed documents on their financials, and be prepared to show your partner the same.
- Do you and your business partner-to-be share common values, goals, and a similar work ethic? It may seem like a no-brainer, but it’s important to consider core values before jumping into a partnership. Make sure you are on the same page when it comes to the important business values like brand identity, workplace policies, and long-term growth strategies. Likewise, it’s important that you both treat others — from your team members and contractors to customers and the media — with the same level of respect.
- Does your potential partner’s skill set clash with or complement your skills? Sharing the workload is one of the best reasons to partner up. But if your skills overlap, you’ll find yourself trying to compete with each other, or worse, you’ll have a skills gap and your new company could be in trouble. In the most ideal situation, you and your partner will meet your business’s leadership needs in different but complementary ways. For instance, if you are the charismatic type who understands how to close a deal, you may want to partner with a more cerebral personality who is more comfortable with strategy.
- Do you have the same style of communicating? At the beginning of any relationship, including a business partnership, we often accommodate someone else’s communication quirks. We may even think it’s cute that he or she doesn’t use proper grammar in emails or enjoys late night phone calls about strategy. But after millions of interactions, these little differences can create real tension. Make sure that you and your business partner can communicate on the same level and with profound honesty before you build any products or sign any paperwork.
- Have you protected yourself and your brand? Joining forces is exhilarating, but it also puts you in a vulnerable place. Have you considered how this partnership will impact the business identity? Make sure that your potential business partner won’t have a negative impact on the legacy you’ve built up to this point. The same logic applies if this is your first business and you are protecting future prospects down the line.
- Are you splitting the company 50/50? Fairness is key to deciding how you will split up ownership of your new company. Just remember to have your lawyer carefully review any operating agreements to ensure that profits are distributed accordingly, and that you are comfortable with any tie-breaker clauses should you and your potential partner disagree.