5 Ways to Choose the Right Business Partner
People often compare business partnerships to marriages. They are both life-altering relationships, they both require financial and emotional investment and both involve money.
But as it turns out, maintaining a business relationship is far more difficult than a marriage.
According to new findings, around 45% of marriages end in a divorce. However, when it comes to business partnerships, as Forbes reports, the number is closer to 80%.
Needless to say, if you’re a first-time entrepreneur, you have to be careful when picking a partner.
Here are a few things you need to consider before choosing the right person:
Look for Complimentary Skills
When you’re starting a business, you only want to work with highly-skilled people. And as the senior director at Amazon, Rakesh Agrawal points out, while startups are filled with talented people, talent usually “comes with blinders.”
In most cases, the biggest blinder is concentrating on a single skill set and losing sight of the larger picture. For instance, in Silicon Valley, most people are enamored with tech for the sake of tech.
Although technology is crucial, success doesn’t come just from knowing how to build something. You also need to know when to build something and who to build it for.
If you have more technical knowledge then your partner, you should be in charge of building your product. And if your partner is better with people, then you should let him handle all the presentations and networking… You get the gist.
Find Someone Driven by Details
While we don’t exactly know the startup failure-rates, we still know that they are rather high. According to some researchers, the rate could be as high as 95%. Seeing how the cards are stacked against you, you have to find a person who knows the industry inside-out.
Obviously, you should look for someone passionate and willing to take risks – that’s a given. However, without knowledge and attention to details, your business idea will be dead on arrival.
For some, bringing in a partner that knows more than they may be a bit problematic because they see it as a potential threat. But you can’t let your ego get in the way of things.
In reality, finding someone that knows more than you about certain aspects of your business is the best thing you can do. No matter how much you know, you can’t know everything. You need a partner that not only compliments your skills but also extends your knowledge base.
Do a Background Check
This may be a little awkward for some, but you have to know if the person you’re going into business with is both financially and legally trustworthy. This is especially important if you haven’t known the person for very long.
Even though this seems cold at first, remember, you need to protect yourself and your assets, so it’s nothing personal. Keep in mind, scam-artists are some of the most charismatic people out there.
At first, you can simply browse the Internet for a few minutes, and check the person’s social media accounts, including their LinkedIn profile, to see how they conduct themselves online.
Moreover, you can conduct an advanced business check and see their previous business endeavors and maybe even look for things like criminal records, embezzlement or fraud. Even if you’ve known the person for quite some time, you should still run a background check, just in case.
Ask the Tough Questions
Once you’ve done a background check on your partner, you have to prepare yourself for some one-on-one talk. When starting a new business, you definitely want to have a positive mind-state, especially if you’re entering a partnership with someone close to you.
But as Sandy Jap from the Emory University explains, you still have to think about what is going to happen if things don’t work out.
Therefore, you have to think and more importantly, talk about potential conflicts. Start by outlining the roles each of you intend to play, what you expect from each other and how will you handle any possible conflicts in the future.
If you want to avoid playing “the blame game” with your partner, you have to figure out how your relationship will work if things go sour.
You Need Mutual Respect
Once again, a business partnership is pretty similar to a marriage. The comparison might be a cliché, but at the end of the day, it’s still the truth. In the beginning, both of you’ll agree on most things, making mutual decisions won’t be too hard and you probably won’t argue too often.
But we shouldn’t fool ourselves – once the honeymoon period is over, disagreements will start happening. And when they start, the best way to resolve your differences is to understand your partner’s point of view and respect his opinion.
According to Norm Wasserman, the author of The Founder’s Dilemmas, around 66% of startups fail because of problems within the management team. The only way to avoid these arguments is to have the utmost respect for each other.
As an entrepreneur, your first decision is what your business to go into. But if you want to achieve success, it would be smarter to think about with who you should go into business with first.
After all, you won’t just decide to get married and start looking for a girlfriend afterward, right?
When picking a partner, you should look for someone that:
- Cares about you personally
- Respects you professionally
- Has enough passion for the business
Most businesses fail due to the internal turmoil that eventually leads to self-destruction. And you’ll definitely agree that there’s nothing more destructive than a bad business partner.