Not every small business is created from the vision of one lone entrepreneur. Many great businesses were built on the foundations of a strong partnership between two or more individuals, but finding the right partner for your venture can be a struggle. Here are our Top 5 Tips for finding the right partner:
1. If you are thinking of starting up in business with a partner (or adding one at a later date), remember that whoever you are adding will also be entitled to their share of the business and all of its equity – possibly even up to half of the business. So for you to even consider a partnership you must be absolutely certain that this person will add more value to the business than you will be compensating them.
2. Don’t pick someone who is just like you because if you do that, what are they adding to the business that you couldn’t bring to the table yourself? Obviously you don’t want someone who is the complete opposite to you as this will lead to endless personality clashes, but you should select someone with a different set of core competencies to your own and a difference of opinion can help you re-evaluate your decisions.
3. Make sure you are all clear about the things you each want from the business. Ask them what their goals are one year, five years or ten years down the line. Are they in it for the long haul or do they just want to make a quick buck? Both are viable options but you may see the business ending up in a different place to them and this might cause problems in the future.
4. It is important to get a legally binding partnership agreement down in writing and that you all agree on the terms. This will cover all aspects of the business that could lead to dispute, such as levels of remuneration and what will happen in the event of one of the partners wanting to leave or passing away suddenly. You may worry that this seems unnecessarily formal, but it is the best way to prevent any disputes before they even occur.
5. Finally, remember to think long and hard if you plan on entering into a partnership with a friend or family member. If the business fails it could put an enormous strain on the relationship as recriminations and blame for that failure starts to be assigned. But going into business with your family or friends can also be a lot of fun and bring you closer together than ever, so it isn’t always a bad idea. Just be careful!