How to choose the perfect business partner

Businessmen shaking hands [Courtesy]

Many entrepreneurs choose to go into business all by themselves, which is great.

But having a business partner can increase your chances of success. A partner gives you access to a wider range of expertise and networks and more financial muscle – all of which can be highly beneficial to your business growth.

A partner in business also gives you another perspective, which comes in especially handy when you have to make crucial decisions. For instance, a partner can help you decide on how to price your products, how much money to allocate for marketing, whether to hire an employee, how much to pay an employee and so on.

Shouldering all these decisions alone is not only overwhelming, but it can also be quite limiting. Having a savvy partner with valuable contributions to make towards the running of your business gives you a leg-up on the competition, setting your business on the path to success.

Most of the most successful businesses today are a testament to the power of business partnership. For instance, Bill Gates partnered with his friend Paul Allen to found the tech giant Microsoft. Steve Jobs paired up with his Steve Wozniak to co-found Apple. Larry Page teamed with Sergey Brin to start Google.

However, business partnerships can also go horribly wrong, wreaking havoc in the business. For example, Mark Zuckerberg paired up with his classmate Eduardo Saverin at the founding stages of Facebook. While Zuckerberg was focused on making their start-up a success, Saverin was more focused on gallivanting around Ney York and living a luxurious lifestyle. To save the business, Zuckerberg eventually diluted Saverin’s shares in Facebook and dropped his name as co-founder from the company’s history.

Having a business partner means giving up a significant stake in your business. They may have differing views that might make it more difficult to steer your company in the direction you’d envisioned. For instance, you might feel strongly about giving a significant part of your profits to charity, while your partner thinks that all profits should be ploughed back into the business. While a partner brings a fresh perspective for making crucial business decisions, they also make the process of decision-making more complex and hence slower. That can weigh down your company operations and hinder its survival in the cut-throat business world.

With this in mind, the importance of choosing your business partners carefully cannot be overemphasized. A business partnership is a long-term legally-binding covenant between two or more people. You will spend lots of time together planning and making decisions both big and small for your business. You have to make sure that your partner is the right fit for you and your business. Here are a few ways to do so:

Make sure you have shared values and vision

As we have seen in the case of Mark Zuckerberg and Eduardo Saverin, incompatible values and vision can spell disaster for your fledgling business. Making sure that your values and the vision for the business align is probably the most important factor to consider when choosing a business partner. If your partner doesn’t have the same work ethic as you, and have a different goal for the business, you will be setting yourself p for failure right from the beginning.

Choose a partner with reasonable financial muscle

Your business needs revenue to get off the ground. Ideally, a great business partner should bring additional revenue to your business, doubling the possibility of success. It should be common sense not to select a partner who is in financial straits, but many new entrepreneurs make this mistake.

Someone who is in financial distress is likely to be distracted and might be interested in quick gains instead of creating a business that’s sustainable in the long-term. In addition, should you really trust someone who has grossly mismanaged their personal or business finances to not do the same for your new business?

Before signing anything, make sure that your potential partner is in good financial standing. Don’t rely on their lifestyle to determine whether they’re financially stable – they might be in debt. You can ask to see their bank statements and receive their full contribution for business capital.

Evaluate your partner’s skills and expertise

The ideal business partner brings in skills, expertise, and experience that complement your own to make for an even stronger business. Even though entrepreneurs feel like they can do everything all on their own, the truth is that no one is a master at all trades. 

For instance, your strong point might be marketing and selling. In this case, you may need a partner who is good at business accounting. You may be great at innovating products but bad at bringing them to market, in which case you will need to pair up with a marketing genius.

Before approaching anyone to become your business partner, carefully evaluate their skills and experience and outline how they’re likely to benefit your business. In your discussions, make it clear that you understand what they bring to the table and outline the role each one of you is supposed to play in the business.

Go for a partner with valuable networks

While money is important, its far from being the only resource that a business needs to thrive. Don’t overlook the value of your potential business partner’s networks. Have they created secure networks in the industry you want to venture into? Do they have connections to potential clients, mentors, or investors? In addition to your own networks, a business partner’s social and business connections can be the secret ingredient for a truly successful and sustainable business.