Vet a Potential Partner: 10 Questions
You've decided to take the plunge and go into business, but should you take a partner along for the ride?
I have had a few partners over the years. One thing I clearly recognize is that the traits, character and skills of the partner are of critical importance. Many people choose a partner to provide the money. But I'm here to tell you, there are people that could have all the money in the world and I would turn and RUN! Why? It's simply an analysis of traits and character.
True story: You start a partnership with one of the smartest people you know. He is gregarious, generous, has a good sense of humor and is honest...maybe. I will also tell you he is a lawyer. Two years into the business relationship he heads to the accountant to complete the taxes. When you finally lay eyes on the taxes, the 50% ownership clause has been changed and you are now the minority partner. When you challenge him he says that is what the accountants have advised. You call BS on that one and dive into the books. You find out that he has claimed eroneous start-up costs and has proffered receipts as back up. The problem is they are from years before your company was formed and for things which had no relation to the business.
Needless to say the partnership, friendship and in fact any relationship is over.
Now on the other hand you can have partners that are truly valuable and whose counsel and relationship are more valuable to you than practically anything. So finding a partner is a lot like finding a spouse. Are you compatible enough to stick together through thick and thin?
Here are some questions to ask yourself when considering a potential partnership:
- What do each of you bring to the table?
- Do your morals and ethics align?
- What are the division of responsibilities?
- How do you handle oversight of the other?
- Do you have an exit strategy if it doesn't work?
- Are you willing to risk the entire relationship over a business venture? – Because you are.
- Can you both be selfless? – Putting more value on the venture and the other person than on personal gain. The foundation of teaming.
- Is there sufficient reward, personal gain, to enter into this? That may seem contrary to the previous question but it really isn't. This question isn't about teaming it's about capitalism.
- How are each of you going to be compensated and what happens if you have to forgo a paycheck or even invest more in the business?
- Can you create a document that outlines everything above?
Finally sit down and talk about your worst fears and theirs and the worst possible scenario. This will help to recognize the difficulties that may come and keep things fair and ethical. If after all of this you are still willing to partner, then your chances of success are much greater.
GLEN BLICKENSTAFF | Columnist | CEO of The Iron Door company
Glen Blickenstaff is the CEO of The Iron Door company, which makes high-end doors and windows. Glen has a track record of turning around and managing retail, building and financial companies.