6 tips to choosing the right business partner
Nothing can sink a business quicker than when business partners do not get along. The fact is when you do not know your potential business partner well things could go bad quickly.
But like most partnerships the beginnings are usually great until the things get tough and before you know it there is anger, fighting and lawsuits.
Following a few simple but important rules can help you choose the right partner and eliminate the ones who aren’t a good fit.
It is important to try and know as much as possible about your new partner and this includes their family life and his or her finances as these factors could easily effect the partnership down the line. Here are some simple questions you should be able to answer before going into partnership with someone.
1 You should trust them
If your gut is telling you otherwise, then don’t do it. You need to trust this person as they will be a big part of your life and not to mention see sensitive information pertaining to your business like bank accounts, client information, and more. Don’t hesitate to run a criminal records check on the person you’re thinking about partnering with, epically if you don’t know them well.
- Agree on responsibilities upfront
This is particularly important. There has been many a business partner breakup because responsibilities are not laid out up front. Be sure to be crystal clear in what everyone’s roles are so there is no confusion down the line. This is an easy hurdle to cross if you take care of this upfront.
Money can sink even a good partnership so agree on this before any documents are signed. How will funding be used? How will profits be distributed, when will they be distributed. These are must do’s upfront before a business partnership will work.
It would be wise to partner with someone with opposite strengths then yours. If you our good at operational levels within the company you don’t need a partner with the same strengths. Find someone with the opposite strengths as you to help grow the business and keep your profitable.
Know what formula would be used to determine the value of the company should anything happen to the partners. Including yourself if you decide to leave. What would determine the value of the company in the event any of this becomes reality? It is much easier to come up with a formula in the beginning then fighting it out with attorneys later on.
- Use an attorney
Have your attorney either draw up a contract for you or have him look over the one you are going to use. Both you and your potential partner should agree on what’s in the contract so there is no issues later on in the process. Everything should be clear and agreed upon before anything is signed. This is the time to make changes or amendments to the contract, not later on.
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