You started with a creative idea. You built that idea into a business model and made it into a reality. Now you realize the immense responsibility that comes with the undertaking. The notion of finding someone to help you out has crossed your mind, but what’re the criteria for choosing a business partner? How should you go about it?
There’s a lot to learn about finding a business partner. We’ve compiled all of the information you need for you to find a business partner that’ll be the right fit. Sit back and get ready to take some notes. Below, we’ll cover the ins-and-outs of the business partner selection process.
Why should I get a business partner?
The reasons for finding a business partner cover a wide range. Perhaps you want the help, perhaps you need the help, or perhaps you haven’t yet realized how having a business partner can be a benefit. There’s much to consider when debating whether or not to take a business partner.
It’s worth pointing out that if you’re exploring the option of taking a business partner because you need help with your finances, you should be sure to consider taking a business loan. Online alternative lending options have opened the doors for businesses who haven’t had any luck getting funding from a ‘traditional’ lender.
In any case, we’ve listed a few incentives to show you why it’s a good idea to find a business partner.
Top four reasons you should get a business partner:
1. Boost your productivity
With a partner in the business, you can take your company to the next level. So much of the time, sole proprietors miss important details that could potentially have a big impact on business performance. With an extra set of eyes, ears, and hands, you’ll be able to double the oversight and improve your productivity. Two heads are better than one!
2. Split the responsibilities
As a sole proprietor, you bear full responsibility for all the rights and wrongs that happen in the name of your business. When you find a business partner, you also find someone to take on a part of that accountability. In other words, if your business were to go into debt or be sued, your business partner would be there to help carry the load with you.
3. Get feedback on business ideas
We all have those nights spent lying awake in bed bouncing ideas around in our minds, but entrepreneurs, in particular, do a lot of thinking. Typically we use our friends or family to get the feedback we want or need. But when it comes to making decisions for your company, having a business partner to reflect ideas off of is a huge advantage.
4. Have someone who’s got your back
While having family and friends to lean on is always a good thing, sometimes they just might not understand what you’re going through as a business owner. That’s why getting a business partner comes in handy – you can have someone right by your side who is going through the ups and downs with you. Find a business partner to share the moments of great excitement, and to help you get through moments of despair.
How many business partners are too many?
Here’s a rule of thumb for you: only pick as many business partners as you would feel comfortable being in a car with for a road trip. Just think about how difficult a trip can be with 5 people. That’s 5 different opinions for food and music, 5 different schedules for bathroom breaks, 5 different people to split costs with, etc.
The same is true when it comes to having too many business partners. How will any decisions get made if the process continuously gets held-up by partners who have conflicting interests and opinions? How would so many business partners agree to split responsibilities and costs? With too many business partners, communication and basic management of the business also become more difficult.
So hold on tight to this rule of thumb: don’t go into partnership with more people than you would agree to go on a road trip with.
But how should you go about choosing a business partner?
At Become making the right pick is of the utmost importance. That’s why, when it comes to acquiring a business loan, you’re matched with the lending partner and loan type that will best suit your needs. It goes without saying that you want to match up with the right business partner as well.
One important note: Of course, the type of business will affect the kind of industry loans a business needs, as well as the specific circumstances that business finds itself in. Be sure to weigh your options carefully in order to choose the right funding solution for your business.
Discover some useful insights on how to make the right choice for a business partner just below…
Criteria for choosing a business partner
Picking a business partner can be tricky if you don’t know what to look out for. A charming smile and contagious laugh are fun to have around, but don’t let the wrong personality traits influence your choice.
Keep these five questions in mind throughout the business partner selection process:
1. Do your goals align?
When you started your business, you had a vision for how to operate and where you planned on taking the company. Out of the many criteria for choosing a business partner, number one should always be an alignment of goals. Even if a potential business partner meets all of the other criteria, a difference in goals will freeze the business in its tracks. Not much progress will be made if the direction is not agreed on.
2. Will your network grow?
Businesses rely on their networks not just to maintain performance, but to improve productivity as well. It would be a mistake to find a business partner who lacks the connections that would benefit your company. The right choice would be to find a business partner who knows where to buy resources or raw materials at better prices, where the right market is to sell the products or services, how to integrate effectively into the industry, etc. To put it shortly: avoid amateur business partners.
3. How much experience do they have?
Similarly to the point above, you want to make sure not to find a business partner who lacks the experience that’s important to the functioning of your business. If they aren’t bringing experience, they’re not a valuable asset. This is one of the most crucial criteria for choosing a business partner, especially if you’re new to the industry which you’re entering with your business. Find a business partner who can be a source of knowledge to help your company overcome hurdles in the future.
4. Do they come with a lot of baggage?
One of the more important parts of the business partner selection process is considering how much ‘baggage’ your potential partner comes along with. We’re referring to personal baggage and financial baggage. Both kinds can have a crucial effect on the likelihood of your business’s success.
If your business partner is constantly dealing with personal crises or has money issues on a regular basis, it will very likely have a negative consequence on your business’s performance. A preoccupied partner means you may wind up picking up the slack and be left wondering why you ever took a business partner in the first place.
5. Do you trust them?
This one couldn’t be left off the list. It’s pretty straightforward but definitely worth highlighting. If you find a business partner who lacks honesty, or if you question the ethics of that partner’s business practices, the negative results will be felt in your personal relationship and in the company’s productivity.
You’ll want to find a business partner who you feel comfortable and confident working with for years to come. Avoid potential business partners who leave doubts in your mind about their trustworthiness.
Make it official: Business partnership agreement
First of all, what is a business partnership agreement? It’s basically a contract between the partners of a business that outlines the specific details of the agreement.
Details of a business partnership agreement would include:
- Designation of powers and responsibilities of each partner
- Term (length of the partnership)
- Division of ownership, profits, and losses
- How the partnership may be broken off
Ideally, a business partnership agreement should be drawn up as soon as the partnership begins. It’s always a good idea to have a legal expert there for advice to make sure that all of the important points are covered in the partnership agreement.
One big reason to have a business partnership agreement is to have a list of answers to “what if” questions. For example, “what if” one of the partners wants to sell his or her share? Or “what if” one of the partners dies? While some of those “what ifs” may be a bit uncomfortable to discuss, they’re important to cover ahead of time so as to avoid any complications later on down the line. Dodge sticky situations with your future business partner(s) by composing a business partnership agreement.
If you found this advice helpful, be sure to take a look over our beginner’s guide to becoming an LLC. There you’ll learn how an LLC differs from the other business structures (including general partnerships), and why registering as an LLC offers awesome advantages.
You’ve got the know-how
Now that you’ve read all about the business partner selection process, you’ll be able to go about it without worrying about potential pitfalls. We encourage you to put these pointers to good use while you’re on the lookout to find a business partner. Feel free to bookmark this page for future reference and best of luck!