One of the first things you learn as a new entrepreneur is that you cannot possibly do everything yourself. There are too many details involved in running a business to rely on any one individual. Many people are used to going to a lawyer or accountant for business advice, but have you ever thought about going into partnership with someone else to grow your business?
There are a few different kinds of partnerships you can consider: legal business partners where you share ownership and responsibility for your company, independent project partners (also called subcontractors) who you can bring on to help with a particular project, or joint venture partners, who you can work with to develop and promote a joint product or program. No matter which configuration you choose, there are some things to be wary of when choosing your partner:
- Legal structure. If there is one thing I have heard often in small business classes of all shapes and sizes it is to be very careful of choosing a business partnership as your legal structure. Horror stories abound of one partner bringing the business down in flames and then leaving the other to sweep up the ashes with complete financial responsibility for the chaos. I don’t mean it will never work, but you need to be very sure that the person you trust with your livelihood is ethical, responsible and trustworthy, in addition to being creative and brilliant. Make sure to talk to a savvy accountant and lawyer before you go down this path.
- Money matters. Specifically, you need to define and agree upon an approach to business finances. What are the financial habits of your business partner? How will they impact the growth of your business? Is she afraid to take any risk? Is he prone to lavish spending and excess? They say that money conflicts are the biggest cause of divorce in the U.S. – it isn’t much different in a business. You should be able to share your credit reports with each other and understand past spending habits. If you feel this is too personal, you have chosen the wrong business partner.
- Market reputation matters. If you are entering into a joint venture with someone, you are risking your own professional reputation. The person doesn’t have to be hugely famous or noteworthy, but he does have to have a solid track record and a good reputation with his clients and customers. If you feel uneasy about working with someone, you should explore the reasons why. Do they feel "too big" to you? Do you have concerns about the quality or reliability of their work? Will they treat your clients right? Do they have ethical business practices? Do you feel comfortable and open talking with them? Would you feel safe allowing them to write to your clients directly? If not, you may want to reconsider a joint venture.
- Communication style. A good reason to choose a business partner is to compliment your own communication style. One of you may be a raging extrovert and the other quiet and thoughtful. This can work well if you respect each other and make sure to discuss your communication needs. If not, you may trip all over each other and find the business relationship deteriorates into resentment.
- Shared values. If one of you feels passionate about delivering exceptional customer service at any cost and the other aims to flip your company for big bucks in a short period of time, you will have big conflicts. Discuss your approach to the business and find out which values you share together that will guide business decisions. Like communication style, you don’t have to be exactly alike, but you do have to share common ground on important things.
I have been lucky enough to work with some extremely smart and professional business partners over the years that have really helped to expand the reach of my business. Some of the best due diligence I have found is watching the person in action. I found many of my business partners at former employers or clients, after working with them on a project and liking what I saw.
I had a martial art teacher many years ago who said something wise to me in this respect. He had been training and teaching martial arts for many decades, and had a tremendous reputation in his field. Unlike many other teachers, I never heard anyone say anything bad about him. When I asked him how he maintained such a good demeanor among lots of politics and backstabbing, he told me this:
"Present the same face to everyone. Be kind and gracious. But be very careful who you "let in" to your inner circle. Spend lots of time watching the person and see how they interact with others. If they are nice to you but rude and nasty to a waiter, beware. It won’t be long before they are the same with you. Most importantly, watch how they treat their mother. Spend lots of time watching this person and have patience. Their true character will emerge."
This makes great sense to me.
What is your advice for choosing a business partner?
Added note: I couldn’t help but use this funny picture. Do you know that the city below this attractive business partner couple is Barcelona?