Choosing a Business Partner
Author: Eran Salu, JD, MBA, CPA
In choosing the right partner you must consider a number of factors. If you chose your partner wisely you will share the risk and alleviate some of your anxiety that is part of going it alone. Here are some factors to consider when selecting your partner:
CHECKLIST FOR CHOOSING A PARTNER:
* Does this person bring expertise I don't have to the business?
* Does this person share my values, ethics, and goals for the business? This is very important! You must not hesitate to bring up these issues in initial discussions with your potential partner. If your partner's idea of business is to get rich quick at the expense of others, you might want to reconsider. Discuss with the potential partner both your short and long term business goals and determine if they mesh with his or hers. Better you find out about possible incompatibilities before making any formal commitments. Ted and Bill were perfect partners, or so it seemed. Different areas of expertise, common goals, both had money to invest in the partnership. Because they were such long-time friends, they never talked with each other about issues that might cause problems in the future. They knew they had a good idea and worked well together and that seemed enough. Unknown to Ted, Bill was about to get a divorce. As female readers know, many men generally do not talk about personal matters, even among good friends, to any degree. Because of Bill's divided attentions, the partnership dissolved. Too bad, since altering the timing a bit might have saved the partnership and another good idea.
* If the partner is a spouse, does he or she share my same convictions about starting and operating a business?
* Does the potential partner share my qualities as an entrepreneur?
* Does this person have family or other personal problems? Be frank and ask the question! You are going to have enough problems with the new business and you cannot afford the additional stress that is brought on by non-business problems as well.
* How well do you know your potential partner? Like a marriage, you are going to be working together through good and bad times. Don't be too quick to get involved with someone who is just a casual acquaintance. Has this person been in a partnership before? How did it go?
Do not be quick to make a decision. An ineffective partner is much worse than no partner at all. When you have picked a partner, the next step is to formally (with the help of an attorney) lie out respective responsibilities of each partner. Plan to the extent possible, for unforeseen circumstances.
CAUTION. It is always hard to really know how someone - even a good friend or family member - will react in a business/partnership situation. If possible, work together on a project or two with your potential partner (before any partnership agreements are signed). This way you both can assess each other before a formal commitment is made.
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About the author: Eran Salu, JD,MBA,CPA is the Founder and CEO of TotalBusiness.com