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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
Picking the Right Business Partner
Nearly 70% of all partnerships fail, typically because the people involved were so excited about their idea that they didn’t take the time to make sure that they were compatible for a business relationship. The majority of partnerships are formed between friends who assume that since they already get along, there shouldn’t be a problem. There are distinct differences between getting along with a friend (or family member) socially and the relationship remaining strong under the daily stress of running a business.
Business partnerships are often compared to marriages. In fact, if you are in a partnership, you will likely spend more time with your business partner than you do with your marital spouse. Much like in a marriage, it’s important that you take time to first find out if you and your perspective partner are even compatible for the long term.
When considering starting a partnership with someone, you must first examine your own strengths and weaknesses to determine if you are partner material. If you have a tendency to work better alone, or prefer to do so, then a partnership is probably not for you. If you can consider the suggestions of others and be open-minded when making decisions, then you’d probably make a good partner. Talk to your spouse, family and friends to get their input as well.
Once you have determined that you are able to meet the challenges of being a business partner, you should to examine the relationship you currently have with the other person.
Ask yourself the following questions:
• Do we have the same motivation?
• Do we have the same values and work ethics?
• Do our skills and strengths complement each other?
• Are we able to communicate with each other, even on touchy subjects, in a cool, calm and respectful manner?
• Deep down, do I 100% trust this person?
• Have we been able to adequately resolve conflicts/disagreements in the past?
Hopefully the answer to all these questions is “yes.” If not, then the next item on your list should be to sit down with your prospective partner and discuss the reservations you may have about the partnership. Laying those items on the table, and monitoring the other person’s reaction to them, will be a strong indicator of whether or not the partnership will work.
Also, talk to the other person’s previous partners and employees to get their feedback on how well he/she works with others. Be aware that, should your prospective partner refuse to provide you with contact information for her former counterparts, then that is a red-flag that you probably shouldn’t do business with.
If all signs point to proceeding with the partnership, then it’s time to test the waters. Take on a challenge together, like meeting a deadline, as see how that goes. Determine your expectations for the other person and see if they are met throughout the project. It’s also important to clearly define the responsibilities of each person, as this will be something a partnership requires every day.
Take your time and be sure this partnership is the right one for you. Don’t let the excitement of your idea allow you to rush into such a commitment. The failure of a business partnership can be devastating, both to your business and personal relationship with the other person. Taking time to find the right business partner can result in a mutual motivation and support, as well as a highly successful business.
Related Small Business Buzz Posts:
Which Business Entity is Right for You? (Part 4)
The Warning Signs of a Doomed Partnership
The Business of Dating While Owning a Business
The 411 on Schmoozing
It’s all in the Family: How to Setup a Family Business