Embarking on a new business partnership can be both exciting and nerve-wracking, as you never entirely know what to expect going in. Unless your new partner is a family member or close friend with whom you have a long history, you want to make sure they are someone who you can trust 100 percent and is aligned with your goals and vision for the venture.
To avoid wasting time and money on an enterprise that is doomed to fail from the start, these six entrepreneurs share a few key things business owners should consider before signing on the dotted line of a new partnership agreement.
Make sure your interests align.
Failure to align goals and interests is one of the key reasons partnerships fail. "I partnered my digital marketing agency with a tech company years ago and it didn't work out because our interests were not aligned," LSEO.com Founder Kristopher Brian Jones recounts.
"The founders of that company had a different strategic vision of what they wanted my company to do, while I wanted to grow my agency and make it more independent," Jones explains. "Ultimately, the relationship had to end so that I could scale my company the way I wanted to."
Set clear roles and expectations.
Establishing clear goals at the outset, along with roles and expectations for each partner, is essential for determining whether the partnership is right for you, according to Kristin Kimberly Marquet, founder and creative director of Fem Founder.
"When I considered aligning one of my businesses with a West Coast company, I learned how relaxed the other party was about producing revenue. Once I learned that my team would carry all of the weight, I decided not to move forward," she explains.
Judge their actions, not their words.
As with anything in life, going only on another person's word isn't always enough. It is important to look at your future partner's actions, too, insists Future Hosting CEO Vik Patel.
"In the business world, you come across a lot of people with big ideas. They are often articulate and convincing. But talk doesn't build businesses; only hard work can do that," he explains. Patel would hesitate to enter a partnership with anyone who hasn't shown that they have the commitment to put in the hours. "Look for proof that any prospective partner has more to offer than hot air," he advises.
Dig deep and do your own due diligence.
This sentiment is echoed by Uber Brands Founder Jonathan Long: "I wasted over a year of my time and energy because I didn't dig deep enough. I trusted the word of others, and in the end the entire deal and everyone involved was a complete circus act."
According to Long, entrepreneurs should do thorough research into their future partners, as well as the the terms of agreement to avoid any unwanted surprises down the road. "I wasted money and, more importantly, my time because I took their word and didn't do my own digging to uncover the facts of the deal. Always do your own due diligence, no matter how great something may appear."
Figure out if they could be your tennis partner.
If they pass your research with flying colors, remember that at the end of the day what matters most is how well your personalities and work styles mesh together, according to Esteban Kadamani, co-founder and managing director of Infinite Windows.
Kadamani uses a tennis metaphor to explain how he chooses partners: "I have been very successful at establishing businesses with partners, and apart from the due diligence you need to do on every deal, always ask yourself: 'Would I pick this person to be my doubles partner in tennis?' This essentially means, do their strengths balance my weaknesses? Can we communicate well with one another? And are we willing to work together?"
Put everything in writing.
"I have a colleague who entered a business partnership based on nothing more than a handshake and a few points scrawled on a napkin," says FE International Founder Thomas Smale, underlining the importance of putting every little detail in the partnership agreement.
"A few years in, the napkin was long gone and the two parties had very different recollections of what they had agreed to. This led to a very messy resolution," Smale continues. The morale of the story? "Having a rock-solid partnership agreement from the start will save money and heartache in the long run."