So, you have an amazing business idea or maybe you’ve already launched your business. But you’re wondering if you should go it alone or bring on someone to help. Either way, you’re faced with the question of what to consider when choosing a business partner. And there are many important factors to take into account if you are considering a business partnership.
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Factors to consider when choosing a business partner
Partnering with someone to run your business is a huge deal! Not to overemphasize the seriousness of this topic, but your partner will be someone you are stuck with for a very long time, for better or worse. Think of it like a marriage or like adopting a child together. It’s a long-term legal arrangement and depending on how good the match is, it may be a winning formula, or it may spell disaster for your business. That’s why it’s essential you do some serious planning and evaluate your situation and any potential partners.
We’ll also include some successful, and not so successful, partnership business examples. So, stick around until the end. Now, here are the top things to consider when choosing a business partner:
It may seem obvious, but the first thing you should ask yourself is, do you trust this person? There’s going to be a lot at stake. So when it really matters, do you have faith that this person will do the right thing? If you’re not sure, you may as well start looking for a new potential partner because a poor choice in a partner can cost you dearly later on.
2. Matches your vision, passion, and goals
Your business is your baby and you’re most likely very passionate about what you’re doing. That’s why it’s best to find someone who shares your enthusiasm for the business. Choose a partner who can lend their energy and drive to complement your own. If your goals are aligned, you’ll have a much clearer target to work towards together. Sharing a common vision was cited as a top requirement according to some of Gen.T’s rising Asian business leaders.
3. Complementary skillset and values
While you’ll want someone passionate, they also should have strengths and skills that will be assets to the business. Ideally, look for someone who can complement your skills. So, say you’re great with numbers but not so hot when it comes to sales. In this case, you’ll want to find a business partner who is naturally great at sales. Find someone who can fill in the gaps and together you’ll be a force to be reckoned with! Also, when choosing your business partner, it goes without saying that your ideal partner should share similar values and ethics as you. Otherwise, you could run into problems down the line when values are tested.
4. Industry experience
If you can find a partner with industry experience, this can be a big advantage. You’ll have someone who knows your specific business landscape. Their experience can help you gain an edge and avoid common mishaps that you may not be aware of. If they also have a network of contacts or clients, this can be a huge help as well.
Don’t forget about money. A good candidate for a business partner should have a history of being responsible with their personal and business finances. Many businesses also require significant capital to get off the ground. So, if a potential partner has access to funds and they are willing to invest, you may want to consider them. And while money is important, there are so many other factors that can make or break a business! Don’t overlook the other important areas listed here.
6. Get along together
Last but not least, it’s going to make your life so much easier if you can simply get along with your partner. If you enjoy working with someone, it’s going to be a much more pleasant ride through the highs and the lows of the business journey.
Benefits of choosing a business partner
As you can see, there are quite a few factors to consider when choosing a business partner. But you may still be trying to decide if bringing a partner on board is even the right move for your business.
Here are some of the benefits having a partner can provide:
- Help running the operation – Businesses take a lot of work to manage, so having someone helping out can be huge. It can take some of the stress off your shoulders and allow you to have a better work-life balance.
- A complementary skill set – Your strengths may fill part of the equation. But having a partner with completely different skills as your own can fill in the gaps in areas where you aren’t as strong.
- Money – Two or more people in the business means there should be more access to cash. So investing in the business and meeting your cash requirements should be easier.
- Two heads are better than one – Don’t overlook the benefits of having someone to bounce ideas off of and to be there for moral support when things get difficult.
Potential downsides to choosing a business partner
While there are many potential benefits to taking on a business partner, there are some potential downsides to keep in mind:
- You’re liable for your partner – Since this is a legal arrangement, you’ll be responsible for any debts or losses incurred by your partner. So, if they make a poor decision, it will cost you as well.
- Lack of control – Depending on your agreement, you’ll likely have to give up some of the control over your business. This is a compromise that can turn some people off from partnerships.
- Money – This time money is listed as a negative because you’ll have to share your profits with one or more partners. If you can get away with running the company yourself, you stand to reap all of the financial rewards.
Partnership business examples
You’re most likely familiar with some of the most successful partnerships in the business world, like Bill Gates and Paul Allen (Microsoft) and Larry Page and Sergey Brin (Google).
But Asia is home to a growing number of successful partnerships as well, such as Grab. Founded in Malaysia and now based in Singapore, this ride-hailing and online food delivery service was founded by Anthony Tan and Tan Hooi Ling. The company’s valuation is estimated to be US$40 billion.
Not every partnership is a success story, however. Take Facebook co-founders Mark Zuckerberg and Eduardo Saverin. The two were famously embroiled in a dispute that resulted in multiple lawsuits.
Taking on a business partner can potentially be a great move. If done right, it can set your business up for great success. But it’s not a decision that should be taken lightly. You’ll want to weigh all the pros and cons and first decide if a partnership is right for you. Then, consider these factors when considering any potential partners: trustworthiness, matching vision, skillset, values, industry experience, money, and getting along with each other.
If you are looking to get your business going, here is another great article to help you start your business plan ahead as a new entrepreneur.
Here’s to your success!