So, you want to find a business partner to help you raise your baby, ahem...your business. Great! But make no mistake—this is one of the most important decisions you will make during the life of your company. Team up with the wrong partner and it may destroy your chances of finding even a modicum of success (and may leave you cursing entrepreneurship). On the other hand, if you find the right business partner, your company may experience growth worthy of the cover of a magazine!
Bill Gates once said, “Our success has really been based on partnerships from the very beginning.” While he was referring to corporate partnerships, between the lines he was referring to Microsoft co-founder Paul Allen. Partnerships are that important, whether your company becomes a multi-billion-dollar corporation or remains a smaller, yet successful venture. Choosing the right business partner can make a world of difference, so you have to do all you can to increase your chances of making a successful choice.
If you want your business to grow and be successful, keep these tips in mind for choosing the right business partner:
1. Know thyself first
Go into the partnership knowing your own strengths and weaknesses, and seek a partner that compliments these. That way, all bases are covered and you won’t leave unfilled gaps.
2. Define the mission
It is important to make sure that you and your partner have the same goals, beyond the money aspect. Yes, getting rich is almost always part of the equation, and that is great. But you also need to have a common mission that you both are excited about. Determine what gets you both jazzed!
3. Date before you marry
We are all creatures of habit. How we act in one situation is how we tend to act in all others. Get to know your business partner outside of work, and take your time getting to know them. Do they cheat at golf? This could be a sign that they may cheat in business, as well. Do they help friends in need? If so, they may be the ideal partner to lead customer service.
4. Get references
No doubt you remember these. Get references from past clients, vendors and, ideally, from some past business partners. Give them a call and feel them out, to see what their attitude is toward the person you are considering.
5. Take a trial run
Never thought of this one, did you? But you can form a partnership that automatically dissolves after a certain amount of time or if certain expectations are not met. Hire a lawyer to define parameters that both partners need to adhere to. Marriages have prenuptial agreements, and business partnerships can, too.
6. Opt for performance-based equity
The mistake I see many business partners make is the old 50/50. In reality, it doesn’t usually play out that way, and things fall apart. Instead, start out a 10/10 split, with the remaining 80 staying in the company. Then, every quarter, based upon performance metrics that you choose (such as sales, hours worked, goals achieved, etc.), split up another 10 percent of the company. Within two years, all the equity will be distributed, and it will be a fair division. No one can fake performance for two solid years—and, if they can, they can fake it for the rest of the company’s existence.
Choosing the right business partner is not only crucial to the future success of the company, but is important to your personal life, as well. Like other entrepreneurs, you wanted to go into business in order to be happier. Choose the wrong business partner and your life can turn into a stress-inducing nightmare. Team up with the right one and you may be whistling and kicking up your heels all the way to the bank!