5 Tips for Finding the Perfect Business Partner
Business partnerships can be fantastic. The best partnerships provide complementary skill sets, build on your strengths, and help your business thrive.
Business partnerships can also be disastrous. The worst partnerships lead to bickering, constant friction, and can even lead to the failure of your business.
I've been very fortunate; I've had the same business partner for ten years. See that guy in the picture with me to the right? That's him. His name is Shawn Collins.
Based on my great experience, I'm sharing five tips you can use to find the perfect business partner for you. Because every person is different and has a different set of skills, everyone will benefit from a different kind of partner.
Start by asking yourself if you need a business partner at all. What is the other party bringing to the table? Are they offering capital for the business, a set of contacts, or a specific expertise? Sometimes the other party offers something less tangible.
I'm going to offer a mix of ways to evaluate what that person brings to your business partnership along with some specific ideas about forming that partnership.
1 – Find someone who completes you. Look for a complementary set of skills that will provide support where you need it most. Are you a technical expert who lacks marketing experience? A marketing expert would make a great partner. If you're great with big ideas and creating excitement, you might look for someone who has an eye for detail and offers a more even keel.
A partner who fills the gaps in your skills will strengthen your business and help eliminate your weaknesses.
2 – Find someone you can work with year after year. You're going to spend a great deal of time with your business partner; it's important you like and respect that person. If you enjoy the company of your partner, or at the very least respect their morals and ethics, you'll have a solid basis for a partnership.
If the opposite is true, you'll find yourself dreading their company and you're going to have a hard time working with them on a long-term basis. Remember that just like a marriage, a business partnership needs trust to succeed. Trust has been a vital part of my partnership since day one.
3 – Find someone who pushes you just as much as you push them. Look for a partner who offers honest feedback, lets you shoot down or improve on their ideas, and expects the same from you. An ideal partner will work with you to resolve disagreements and move forward together, or not at all.
You need to be able set your ego aside and ask them to do the same. You'll both benefit when you work for mutual success.
4 – Do your due diligence. Don't take a partner on face value. Ask for a resume', references, and possibly even financial statements. Transparency strengthens a relationship, and verifying your business partner's working history ensures transparency. Don't be afraid to ask questions and talk through your concerns.
It's much better to discover and deal with an issue early than after you've formalized your partnership.
5 – Plan for ownership changes with a buy/sell agreement. Just like a pre-nuptial agreement protects your assets if your marriage ends in divorce, a buy/sell agreement protects your business if your partnership ever dissolves. A contractual buy/sell agreement clearly outlines what happens should one of you need to or want to sell your part of the business. Having this in place ensures a smooth transition, and can be the difference in a business that lives on after a partnership ends and a business that ends with that partnership.
I hope these tips help you on your search for the perfect business partner. The right business partner makes all the difference, and I owe much of my success to mine.
Missy Ward
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7 COMMENTS
Nice post Missy and yes, so important to find the right partner. I ran a successful business with my first business partner for just under 6 years (had been friends for some time before that). Unfortunately he had to relocate and sell his shares in the business, so I went into partnership with someone else who I had known for about 15 years and *thought* I could trust. Was an absolute disaster from day 1 and within a year the business which I had put my heart and soul into for (by that point) 7 years was closed.
@Richard – partnerships can work and having someone to bounce off can be great as it’s difficult making all the decisions yourself sometimes. But, as Missy said, it’s all about who you go into business with.
Hi Missy,
from my experience I can confirm all of your tips.
What I noticed as very important is to share the same vision for the business. You need to be working towards the same goals, to get the most out of the partnership.
I also agreed with my business partner that none of us can do expenses that are over a specific amount of money. That assures us that every expense is based on business interests and not on personal interests.
Best regards,
Jan
Great article. I’m very cautious when it come to partnerships. Had some bad experiences so I tend to stay away from them especially with friends.
Excellent points Missy, and not sure if this is in the buy-sell agreement, but having a basic business will, ie, what happens if someone passes on so it doesn’t get muddled with the partners’ relatives/other businesses, as well as Key Person Insurance – if that person is irreplaceable, it’s good to have coverage while the other partner tries to steer the business.
Yep, most buy/sell agreements usually covers what will happen in the event a partner passes away. But I agree, Key Person insurance is really important too. It’s not cheap, but it’s worth every penny.
Great post, Missy – you and Shawn are fortunate to have found each other as compatible, long-term partners!
I’d add one thing to your buy/sell, partnership agreement, or other founding documentation – if the expectation is that both (or all) partners will play an active, working role in building the business, be sure the agreement reflects that. I’ve seen situations where one partner lost interest or was unable to participate not long after formation, but held onto the equity stake. That gets messy.
The agreement could include performance milestones for distribution of shares or options. A partner who flamed out early would be diluted as the performing partners increased their equity. No doubt there are many other ways to deal with this pitfall. A little planning up front can avoid misunderstandings and prevent nasty disagreements later.
Great tips, Roger. Thanks for adding them!