If you are thinking about starting a business, chances are you can’t do everything by yourself.

Take Microsoft. Bill Gates hired his high school buddy, Paul Allen, but it looks to me like Gates decided that Allen (net worth: $14.2 billion and also a programmer, not a sales or business guy) did not have what Microsoft needed long-term.

By contrast, with his Harvard classmate, Steve Ballmer, Gates got someone who would handle sales, finances, and other stuff Gates did not want to do so he could focus on product strategy and other matters that he liked to do. 

The point is that hiring a business partner is a critical decision, and it probably does not make sense to hire a friend unless that friend has the skills your venture needs that you don’t want to do.

If you hire the wrong partner, undoing your mistake will be painful and expensive. If you hire the right one, you could be much better off--even if you don’t get to be the world’s wealthiest person.

Here are five steps to hiring a business partner:

1. Know Your Purpose.

Before you can answer that question, you need to answer some more fundamental ones: Why did you start your business? Was it to have fun making and selling your product or to make enough money in a few years to retire? What do you want it to look like in five years--a mom-and-pop or a $200 million business?

Once you have answered these questions, you are in a better position to decide the factors to consider in bringing in a business partner. For example, let’s say you are in the cupcake business. If it’s destined to become a large company, you will need different business partners as the company grows. But if you want the start-up to remain a one-shop operation, the capabilities you need in a business partner are going to be different.

2. List What Needs To Be Done.

Regardless, when picking a business partner, the next step is to list what needs to be done to achieve your goals for the business. Here are some items that might be on your list: choosing the product selection, buying ingredients and equipment, baking the cupcakes, finding a space to operate, attracting and keeping customers, and getting financing.

Once you have your list of key activities, you might check with other people in the industry to find out if you missed anything and to learn which of these activities are likely to be most important to your success--particularly at the early stages of the company’s development.

3. Decide Who Should Do What.

The next step is to create a matrix. The rows will be all the critical activities that will need to be done, there should be a column with your name on the top, and another column labeled "business partner."

You should put a check mark under your name for the activities that you want to do and leave blank the ones that you would rather delegate to a partner. I suggest that you also try to assess whether you are really the best person to do the things that you want to do.

For example, Can you think of at least three successful experiences you’ve had doing each of the things you want to do for your cupcake business? If so, you should do them. If not, you might consider whether those are activities that your partner should do instead.

4. Pick Your Business Partner.

The next step is to search your network for a business partner who can best perform the key activities that you don’t want to do. Even if you consider a friend as a candidate, you should definitely compare that friend to other candidates who get good references from people you trust.

You should interview all the candidates, pick the two or three that can best do what needs to be done, and conduct intensive due diligence on the finalists. Since your business will change as it grows, you might want to pick a candidate who you think can take on different roles as the needs of the business evolve.

In general you want a business partner with high integrity and the ability to perform the activities your business needs done. Moreover, your business partner ought to be rigorous about communicating what he or she plans to do, doing those things, and letting you know about them. Finally, as your business changes, you will need different skills--you want a partner who can learn those new skills and do them well or be honest enough to admit that it’s time for a change.

One thing’s for sure. If your friend is not the best candidate and you hire him or her anyway, you may lose your friendship and the business.

5. Sign a Contract With Your New Business Partner.

You need a contract that describes details such as what the partner will do, how you will decide whether to give equity to the partner. If so, list the objective things the partner will need to do in the future to earn that equity, cash compensation, benefits, and the terms under which your partnership will dissolve.

Do all this right, and your start-up is off to the races; do it wrong and your venture could be doomed.