Finding a partner for your small business is one of the best ways to get more capital for your ideas and achieve business success. But beware – such partnerships can also destroy your company if you do not make a wise business partnership choice.
Many widely known companies were started as partnerships. For example, the IT giant, Microsoft, was founded on the wings of successful cooperation between Bill Gates and Paul Allen. This and many similar examples from various industries prove that successful business partnerships can lead to great success. On the other hand, according to Noah Wasserman, a professor at Harvard Business School, 65% of high-potential startups fail as a result of conflict among co-founders.
In an attempt to point out some of the most frequent pain points of a business partnership and offer concise guidelines on how to better look for your future business partner, we have made a collection of tips that you are certain to find useful.
Know your own strengths and weaknesses
In order to understand your future role in the company, you need to be fully aware of your own strengths and weaknesses in the first place. Take some time to assess your personal skills and try to be as realistic as possible.
Look for a partner that you genuinely trust and like
While many people may argue that trust is being built over time, there has to be a good starting point and trust to build upon. Finding the right partner that you genuinely like sets your business on the right path of avoiding some of the possible conflicts in the future. In case there is some animosity from the very beginning, and clear distrust, then such business partnerships should definitely be avoided.
Seek a partner that shares the same values as you do
Having different approaches towards solving various issues your future company may experience is to be expected; however, such differences can certainly be drastically minimized should you have a partner that shares the same values like you do. Whether those values focus on work ethics or commitment to family, the point here is – the more similarities you have with your future partner – the better your future partnership will be.
Have a couple of one-time projects first
An excellent way to get to know your future partner better is to have a couple of smaller one-time projects working together. Even if those small projects are not set to make you billions or even to make any significant income, the sheer benefit of getting to know your potential partner better and learning more about his ethic and skills is an important aspect of such an endeavor. Finding out that your future partner likes to cheat or that he has some really bad habits that could drive your future partnership company into bankruptcy is an important thing to learn prior to investing all your life savings into a business partnership with such a person.
Define the plan for success, but think about the exit strategy as well
Having a great business plan is definitely a good foundation for the future success. Still, it is argued that having a clear exit strategy is a smart thing to do at the very beginning. Hence, it would be a wise idea to define a “what-if” plan for the scenario in which your mutual company results go south. In other words having a document that clearly defines the minimum success level for the continuance of partnership and conditions for leaving the partnership is a wise step to take. Agreeing with your potential partner about these terms and conditions could make a difference between having a nightmare split up with your partner or having a gracious end of unsuccessful business partnership.