Doing business with a partner is always going to be preferable, but only if it's the right partnership. In fact, the success of your company often falls completely on whether or not you work well together with your partner. Hard work and "know-how" isn't always going to be enough. If you have the wrong partner, your work won't get done faster or better, you'll just be spending time and resources on someone who is taking half of your profits (and they may feel the same about you). It's all about balance and understanding, and that's harder to find than many realize. This is why it's so crucial to ask yourself certain questions about the business partner before things get too deep.
10 Questions to Ask Yourself Before You Bring on a New Business Partner
Again, it's an all-too-common problem. Entrepreneurs think that they can work with a certain person and then don't realize the problems until the company is well underway and it's too late to make sure serious changes. Change that "I think I can work with this person" into an "I know I can work with this person" by asking yourself some of the following questions:
1. What will be your ownership agreement?
Nothing tears a partnership in half faster than finances. Before you even begin considering a partnership, you have to discuss ownership of the company. You should know what you personally expect before going into a meeting with a potential partner, and stick to what you feel is right. Also be sure that you think about and then discuss what happens if someone chooses to leave the company. If that's not in writing beforehand, things could get messy.
2. Is the partner committed to your bottom line and your long-term goals?
Part of owning a successful business is having a clear vision and going after it. This will of course be refined over time, but by and large you want to make sure that your company goes in the direction that you want and you don't lose the mindset you started with. A partner can oftentimes come in and try and shake things up, and while that's a great thing, making sure you're both on the same page in terms of long-term goals and the passion needed for the company's mission is crucial.
3. Are you okay giving up a little bit of control? Are you open to new ideas for the company vision and future?
You have to be honest with yourself, which believe it or not is one of the top reasons that partnerships don't work out. If you know you're a little bit of a controlling manager and/or you're used to running the company a certain way, bringing in a partner might be too much change for you to handle. The likelihood is that a partner will do things differently than you, and while this isn't a bad thing in general, it can be a bad thing for some company owners. Again, it's all about being honest with yourself and understanding how well you work with other people.
4. Why do you want a business partner in the first place? Does the partner have a skillset that you don't have?
You have to have a clear vision as to why you want a partner in the first place. What exactly is it that you are hoping to get from a partnership? For many, it's added knowledge in a certain subject area that you're not as familiar with. If this is the case, then you have to make sure that your partner has the skillset that you don't have. If his/her strengths lie elsewhere, then you likely wouldn't be getting what you need from that partner.
5. What do you need from a partner? What responsibilities would you define?
For other business owners, having a partner is more about splitting up work equally and giving you more time to focus on certain tasks. In other words, you may be getting overwhelmed with work. If this is the case, then it's incredibly important to lie out some of the responsibilities that you would have and then that your partner would have. This ensures that you actually need a partner in the first place, and it allows both parties to get a good idea of what's expected.
6. Is the partner in a stable place in his/her life?
Before brining on a partner you have to ask yourself this question. If there are family or financial factors coming into play for the partner you're thinking of working with, it may turn out to be more trouble than it's worth. This occurs most often when considering working with a family member or a friend. Of course certain factors can definitely be worked out and you shouldn't immediately dismiss someone because they have a family (obviously), but just try and get a feel for whether or not things are stable.
7. How does this potential partner deal with conflict, either with your or with a potential staff? How do you prefer to deal with conflict?
Conflict is bound to happen in any company as well as within any business partnership. You have to again be honest with yourself about how you like to solve conflicts and then talk with the potential partner about this issue. Again, stand first in your beliefs and make sure the partner has similar values in this area.
8. What will your customers and staff gain (or lose) from you starting up a business partnership?
Don't forget to think about your customers and your staff. Although it may seem like it's all about you and how you'll work together, there are a lot of moving parts in a company. If you can't think of any reasons that your staff and customers would benefit from having another decision maker around, you may want to think long and hard (again) about why you want a partner in the first place.
9. Are you and the business partner in agreement about your exit strategy?
You have to be on the same page when it comes to your thoughts on selling the company. This is a potential conflict waiting to happen, so have a timeframe in mind and your finances in order to have this discussion and make sure you're on the same page.
10. Are you able to have a trial run before committing to the partnership?
If you ask, most potential partnership will be happy to do a trial run before they fully commit to a partnership. It's a great way to see how it feels to have a partner and see how well (or how poorly) you work together.