Considerations before choosing the right business Partner
Before you even think of pulling the trigger with a business partner, contemplate whether you even need one at all. If you decide it is a good idea, make sure you get the best match to your own values, goals, leadership style and skills. Because once you become partners, it is vastly more difficult to undo the partnership than it is to create it.
Following are eight points to consider to avoid a bad partnership.
This is first on the list for a reason. Bottom line, do you trust this individual with your personal bank account. If the answer is “no”, think twice. As partners, every dollar you spend proportionately affects your personal check book.
If the person is a good friend, make sure that their goals, values and responsibilities are aligned to yours. Don’t assume just because you get along as friends that they are. Take a look at their personal life and how stable it is. Personal problems are difficult and can easily complicate their professional life. If there is any doubt, don’t do it.
3. Varied strengths.
Make sure you and your partner’s strengths are in different areas. If you have two people who are good at sales and no one who is good at executing on an operational level, it will be more challenging than you think. It is much better to bring someone in who will compliment your strengths. In order to grow profitably, keep some balance.
4. Balanced responsibilities
Both parties need to agree up front what their responsibilities are in the company and stick to them. If one person keeps trying to take over and do everything or ends up doing very little, then the partnership will start to unravel and feelings of resentment will fester.
Just like in marriage, money is always one of the major problems in a business partnership. Therefore, agree in the beginning how you will use the funding you raise and how the profits will be distributed.
Decide on a formula to determine the value of the company should one partner decide to leave to avoid disagreements. Buy/Sell agreements are incredibly useful for discussing all possibilities and how they will be handled before they become a reality.
Why is all of this so important? Because a great business can be severely damaged by a bad partnership and never reach its full potential. Starting a business and/or a partnership is an emotional experience. When doing your due diligence, set your emotions aside and make sure everything lines up and has the potential at staying aligned.
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