I always tend to do things solo because it’s more convenient that way. Same with business. I used to handle everything on my own because I don’t want arguments… confusions… Not until I discovered that forming a partnership could actually make my business a whole lot easier.
They say that two heads are better than one. Before, starting a partnership made me so anxious but it is actually worth it. There’s more capital available for the business, tax saving benefits, shared responsibilities, more ideas for decision making, and it’s more fun! I get to exchange great business ideas with my business partner.
If you have already established a business and want to hog the benefits of a partnership, it’s not yet too late to change your business structure. However, starting a partnership is not that easy. Getting in business with someone is exactly the same as marriage. Finding your business partner takes a lot of considerations. And there are actually businesses that turned sour when they have chosen the “wrong” partner.
So before you sign that partnership contract, here are some important things you need to consider when forming a partnership.
1. Choose someone who has complementary skillsets to yours.
It would be wiser if you choose a business partner who is not the same as you. We often have the tendency to hang out with someone who’s into the same circles… someone who also likes what we want, or someone who also does what we do. Though these are also necessary things to consider, when looking for a business partner, you have to look at their skillsets first.
Say, you’re good at business operations but you’re poor at marketing and sales. So in this regard, a person who’s good at marketing and sales would be your perfect partner.
You have to think what each person could possibly bring to the table. It isn’t a great idea to partner with people with the same skillsets as you. Hence, look for someone with skills that you don’t have and get a strategic partner.
2. If you only plan to partner with someone for capital purposes…
A lot of entrepreneurs are only looking for partners to fund their business. Well, there’s nothing wrong with this.
Most often, you want to call for a business partnership because of two major reasons:
- Strategic – Your business needs someone with the right skillsets, experience, or network of people to get the business going.
- Financial – Your business doesn’t have enough capital or funding so you want someone to cover you for it.
So if you are only looking for an investor for money, consider making them as a “silent” partner. So as a silent partner, he is only limited to providing capital to the business. And of course, since a silent partner is not typically involved in the business’ daily operations, you need both to come up with an agreeable split of profits. Should it be an 80-20 split, or a 70-30?
3. Must have the same morals, visions and goals.
As mentioned earlier, a business partnership is like marriage. So choose someone whom you can trust and someone who has the same morals, visions and goals as you.
Remember, you will be seeing your business partner a lot for meetings and certain agendas. Would you let your partnership in business go down the drain just because your partner says something you don’t like? Even petty chats and talks could escalate to something big especially if you have a hard time controlling your cool. So if you don’t want a partner who irks you to the bone, he or she should have the same morals as you.
As for visions and goals, you and your chosen partner should lay out plans on how you will see your business grow over the course of years. Do you both agree or not?
4. Choose someone with leadership skills and the ability to run a company.
I have had business partners in the past and they were absolutely amazing sales people. I formed a partnership with them thinking that they’d be able to help me drive more sales for the business, but it didn’t work too well.
Though sales are one of the most important aspects of a business, if a person does not have the ability to run a company and manage his or her staff, your business is up for a bumpy ride.
I know I have told you earlier to choose a business partner that has a complementary skillset to yours. But that’s not the only bases for choosing a partner. Just because someone is good at their trade, it doesn’t mean that they have the leadership skills and the ability to run a company. Hence, be partners with someone who has an experience running a business.
5. Do a background check.
Some entrepreneurs choose to partner with their family, relatives or friends. But it doesn’t mean that you can’t be partners with someone who’s not inside your circles. In fact, you can find business partners online.
However, be extra careful when you find business partners. It is very easy to end up with a partner who has a criminal record simply because you skipped this step. From personal experience, I can tell you that this can tarnish your brand, not to mention the mistrust it creates in your partnership.
You don’t have to hire an agency to do the background checking for you. You can use Google search to look for your partner’s social media accounts. Or much better, confront each other and each of you will present their records.
— More Time Profit (@MoreTimeProfit) July 19, 2016
Though forming a partnership has its ups, it won’t always be roses and sunshine. Sometimes, you and your business partner will fight, laugh, or probably cry, or worse, wanting to leave the partnership. However, if there’s respect, structure and a strong bond, your business partnership will last for several years.