Starting a business is a huge undertaking. A great way to share such a large responsibility is by having a partner or partners to go into business with you. The value of a partner is shared liability, business knowledge, time investment, financial costs, etc… Choosing a business partner is not as simple as finding a family member, friend, or people we think are good people. For that reason, I have complied 5 things you need to consider before you decide to go into business with someone.
- Check Their Brand & Personal Life – If the person you are thinking of going into business with has a bad business reputation or the reputation of their brand/company is not a good one, then you could inherit not only that negative reputation into your new business, but also fall victim to the reason for that bad reputation if those bad practices are used during your partnership. If a person is horrible in real life, they are more than likely horrible to share a business with too. A person that is selfish and inconsiderate in their personal connections is definitely more apt to be that way in their business connections. Also, they can be a great person but there is a direct correlation between how people are with money, motivation, and getting things done in their personal life and how they would be in those same areas in their business life.
- Require Equality of Investment – When you go into business with a person, make sure they are as invested in success as you are and have just as much to lose if the business fails as you do. That investment can be money, time, or any valuable commodity being used to invest in the business. Without equal investment, your new partner can easily choose to default on contracts, loans, business transaction, or other agreements that can legal ramifications for you both. Also, anyone less than equally invested has less to lose should they choose to walk away.
- Be Co-Signatories On Banking Accounts. Discuss the logistics of how the business accounting will be handled. How will the bank account be set up? How will be deposits be handled? What’s the withdrawal process? How will money be distributed? Who will pay the business expenses? Will there be separate a neutral party for the business finances, like a bookkeeper, accountant or CPA? Whatever is decided is fine, but always get an account where you both have to sign for withdrawals or anything over certain amount. A single person with complete access gives them the discretion to handle the money in ways not agreed upon or even take all the money without knowledge of the other partner.
- Know Exactly What They Bring To The Table. What are their strengths and their weaknesses? This knowledge helps you assess where they will be an asset or a liability to the business. A great partnership is when partners balance out each other’s strengths and weaknesses. However, if you both have the same weakness in an area, that may be a clue that you should hire someone else to be strong in that area. Simply be sure that where your new partner is strong is an area that is needed and of value to the business.
- What Is Their Likeability? – You have to know if you like the person. Much like parenthood, you need to really take the time to get to know them before having a baby (business) together. Owning a business is hard, but it is even harder when you share the burdens with someone you simply you do even like as a person.
Following these 5 tips will be a stepping stone to picking the right person to go into business. There are so many more that we can discuss, but let’s start here first. It is important to evaluate as much as you can about how things will be after going into business with someone BEFORE you decide to go into business with them.
Go ahead and start preparing yourself to find the best business partner you can.
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