Like marriage, entering into a business partnership is not something that should be taken lightly. Because like in marriage, your business partner is someone who will be standing beside you through the good and the bad, the thick and the thin. And at times you may well be spending more time with your business partner than with you spouse.
Before entering into a business partnership, think about why your business venture needs a partner. Then answer these four questions before taking the plunge.
Do you complement each other? When going into business, most people instinctively think that they need a compatible partner. And, although it helps to like each other, partners who have compatible skills will likely see their business flounder. Successful businesses are ones that are run by partners with complementary skills – for example, our Rob Falkner is marketing-challenged and our Kevin Maynard is certainly no expert in finance. Complementary skills give a business well-rounded expertise.
Do you have similar business goals? For a business to have a chance at success,partners need to be working towards the same end game. Growth focus will differ if one partner wants to create a legacy to leave his children and the other wants to position the company for sale within a few years. Have clear and direct conversations about both short and long-term goals before jumping in together.
Do you like each other? This may seem like a given, but remember, business partners may end up spending more time together than with their spouses. You need to be able to tolerate working side by side every day and be able to accept each other’s personal strengths and flaws. A certain level of friendship is definitely an asset.
Do you trust each other? Trust is the foundation of every successful relationship.By trusting each other’s abilities, decision-making, and efforts, the partnership can survive the invariable ebbs and flows. Without trust, there’s only resentment,suspicion, and doubt, all of which leads to a tumultuous partnership.
Once you can check off all of the boxes, remember this line from Robert Frost’sMending Wall: good fences make good neighbours. Good partners must have a good shareholder agreement. Because no matter how firm the handshake, a successful partnership needs firm parameters.