Business partnerships bring great minds together. But that’s not all—a business partner shares the risks and rewards of owning a company. However, Exit Consulting Group estimated that up to 70% of partnerships fail over time. Personality clashes and financial disagreements can end an alliance. And disputes over operational direction may break bonds between business partners.
While you can’t predict the future, you can vet a business partner and do your due diligence to prevent problems. Build a successful company by knowing what to look for and what to avoid. Use these tips to find the right person for the job.
How to find a good business partner
Once you decide to take on a business partner, it’s time to find one. Start by writing down what you’re looking for in a business partnership and assess your strengths and weaknesses. Will your partner contribute financially and take an equal role in day-to-day operations? Or do you want someone to work in the background and handle tasks that are out of your league?
Create a list of questions to ask potential partners. These should uncover details about an entrepreneur’s specific characteristics and skills. Don’t forget that the other entrepreneur will also evaluate you and your business. Be ready to share your vision and mission during the meeting.
[Read more: Forming a Business Partnership? 6 Things to Consider First]
Core qualities your business partner should have
You’re about to spend a good chunk of your time with a business partner. Their disposition and character can help drive successful business outcomes or hold your company back. While no one is perfect, entrepreneurs with certain attributes can improve fiscal and operational performance.
Entrepreneurship traits and qualities include:
- Trustworthiness: Bidirectional confidence results in partners spending less time and energy micromanaging or second-guessing each other.
- Leadership: A partner with the right leadership style and skills helps your business grow. Look for individuals who recognize potential, mentor staff, and excel at delegation.
- Emotional intelligence: Self-regulation, empathy, social skills, motivation, and self-awareness keep business partners tuned into each other, their customers, and their business.
- Teamwork: A give-and-take relationship is necessary for a successful partnership. But your partner should also work well with others and not be afraid to get their hands dirty.
- Communication: Smart, transparent interactions keep everyone on the same page. But communication style differences can create invisible barriers to success.
- Solution-orientated: Optimize operations and build resilience with a partner that excels at problem-solving.
- Patience and perseverance: Being a go-getter is excellent, but business owners must also cope with setbacks. Being able to endure and stay composed during challenging times is an essential entrepreneurial trait.
Look for a partner that shares your values and vision for the future.
Consider industry and business experience
Although plenty of entrepreneurs excel in new markets and as first-time business owners, experienced partners can bring additional resources. Those with industry knowledge may have a network of contacts and insider information about customers or your competition. Likewise, look for a business partner who understands how to run and grow a company. They don’t necessarily have to be a former business owner, as someone with management experience can bring a lot to your team.
[Read more: How to Make an Employee Your Business Partner]
Explore a potential partner’s goals and values
A business partnership agreement will lay out the business structure and address legal matters. But it can’t fully account for every strategic decision during a company’s lifetime. Look for a partner that shares your values and vision for the future.
You and your business partner should share similar thoughts about the following:
- Risk tolerance.
- Crisis management.
- Work-life balance.
- The definition of success.
- Company culture.
Review their history and reputation
Reputational damage can ruin hard work and become a public relations nightmare. Moreover, a history of instability or unethical choices can indicate future problems. Take reasonable steps to research a business partner before tying your name and brand to them, even if you’re running a business with a friend.
Run a background check and verify references to learn about a partner’s:
- Reputation within the industry and community.
- Financial history, including credit rating, tax issues, or bankruptcy.
- Legal difficulties, including civil or criminal arrests and lawsuits.
- Interactions with previous employers and job history.
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