As a growing business, deciding on whether or not to take on a business partner can make or break your company. Her are a few things to consider before making the big decision to accept or reject a business partner.
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Business partners can make or break a company, and a lot of budding entrepreneurs make many a mistake when it comes to choosing the right business partner in the excitement of growing a venture. I am not sure if it is because of the fear of going at it alone or whether it comes from experience, but here is some advice that should help if you’re considering a bringing a partner into your business.
1. Don’t partner with someone because you can’t afford their services
I made the mistake in a recent business opportunity of mine where I wanted to start a social media agency with some friends. I found a good photographer and a good copywriter and offered to go in 3-ways.
Related: Business partnership agreements
I would handle the business, we’d each bring in new business, the photographer would take the photos and the copywriter would write the copy. Fool proof, right? Wrong.
Firstly, this company would never be scalable. Secondly, in order for our company to be the best, we would always need to have fresh talent and I couldn’t go around asking new photographers to replace the owner of the company. Always employ a skill because it will pay you back later. Think long-run and not immediate need.
2. Think rationally and not emotionally
I am an emotional person. Often, I feel it is necessary to have a business partner simply because I hate having to make decisions on my own. I have met a lot of young entrepreneurs who feel the same. I have learned over the years that simply bringing on a partner so you have the certainty of another is not a way to build a strong business. Think rationally about the long run of what your business needs in order to thrive.
3. Having the same values is great, right? Well, yes and no
Having the same or similar values to your business partners is great for building a solid partnership. However, ensure that you aren’t the same person and that each of you has skills that dovetail. Cloning yourself isn’t grounds for a good business partnership in the long run.
Related: 5 Things to do before saying ‘I Do’ to a business partner
4. Understand very clearly what their financial objectives are for the company and themselves
I was once stuck in one of my first companies with a business partner who needed cash out now and so was driving everything towards signing deals that could get cash out as opposed to looking at the long run. It created so much tension in our partnership that eventually we shut down. Don’t go into business with someone who is in a financially tight spot.
5. Always work with contracts
I know it may seem obvious and some people hate the pressure of contracts for the fear of ruining a relationship, but signing your contracts with your partners - especially your buy/sell agreements and how to value the company will set a clear road for both of you as you travel into the unknown together.