There are times in the life of a business where you may entertain the idea of having a business partner. Maybe you feel overwhelmed or lack expertise in an essential area. Perhaps you are a social animal by nature and thrive when you can bounce ideas off of others. Many businesses are started by two friends who, in a moment of inspiration, begin to work out what it would take to achieve their “what if…” All of these are common scenarios but it is important to consider who you can succeed with. To do that, we had better look at what you need from a partner and why you need it.
In fact, it is a good idea to know if you need a partner in the first place. Search Google for “reasons not to have a business partner” and you’ll quickly see that not everyone thinks a partner is a good idea. A business partner will not:
- Be a happy go lucky pal that brightens up your day when you walk into the office
- Be a selfless, tireless comrade who gladly sacrifices his or her every waking moment in the cause of building the next great American company
A partner is not a silver bullet for your problems.
However, a partner can provide a skill that is valuable to the success of the business that you don’t have. A partner can work easily in critical business areas where you struggle. That can make the collaboration powerful as long as you can communicate effectively. Notice I didn’t say easily. Effective communication is just what is says. You understand what the other is saying and can put together a set of actions that get the results you are looking for. You have to be honest with yourself about your own expectations so you can define what it is that you want out of a partner. Then you have to go find the person who fits the criteria.
I think it is important to mention here that unless you have a really, really good reason for it, don’t get someone you think is like you. You will end up missing the opportunity to gather additional skills that could make a difference and you’ll end up with someone who doesn’t live up to the illusion of who you think you are. Big waste of time.
Once you find the person you think is a good fit, get together with legal counsel and explicitly define the rules of organization in an official document, who gets paid what, what happens if the company is sold, dissolved, sued…you get the idea. Work out everything. Everything. Work it out then and there or don’t become partners. Don’t spend a dime on anything in the name of the company before that Magna Carta is created and signed.
One characteristic that is difficult to know without the passing of time is trust (see the paragraph above). Your challenge is to balance boldly choosing a potentially powerful person who can put you over the top with protecting yourself from a financial and emotional face-plant. I think the key is to choose the person with the most upside, the fewest blatant fatal flaws and trust the legal agreement the two of you can forge together. After that, it is all up to how well the two of you can learn together and execute.
Remember that for a while, you could end up spending more of your day with this person than your significant other. Indeed, many partnerships have been compared, for better or for worse, to marriages. So you both better try to at least make it a civil union.