This excellent piece of writing is a guest post by Sathvik Tantry of TheresMoneyEverywhere.com.
It’s hard to run a business by yourself. After all, no one is good at everything, and it’s great to have people who can keep you motivated and give you new ideas. Business partners can also provide valuable skills and business contacts to help your venture succeed.
But picking the right business partner isn’t easy. I’ve been a businessman and entrepreneur for several years, and I’ve had my fair share of business partners. I’ve been lucky in finding some great ones, but there are also many people I wish I hadn’t worked with. Here are some things you should think about when selecting a business partner:
Find someone who is on board with the core values of your business. These are the values that are going to define your business relationship and shape the company as it grows.
One way of doing this is to make a list of values that matter most to you, and ask your prospective partner to do the same. Then, see what the overlap is and whether you can reconcile any differences. Make sure that you are clear on communication and get to the important points sooner rather than later.
For example, one partner may prefer to maintain control and autonomy of a business, while another might prefer to sacrifice these things in order to scale. It’s important to hash this out beforehand so you can identify common goals and visions. Otherwise, your differences may lead to conflicts down the road.
Several years back, I tried partnering with a friend on a new business venture. While this friend was great at taking direction, he rarely pushed the boundaries to find new opportunities and come up with new ideas. To him, it was “good enough” if he did his assigned job. While these types of individuals make good employees, they rarely translate into strong business partners. Micromanagement is especially ineffective when building something from the ground up.
Instead, be on the lookout for highly motivated go-getters who will go above and beyond to complete their assigned tasks. Seek out partners who have a history of following through on their commitments. Never partner with anyone that you feel you have to “mold” into the person you want them to be.
Remember, the big rewards go to those who are wildly successful. There is always a huge drop-off in payouts between first and second place, so you want people on your team who are striving to be #1.
A good way to test if someone is self motivated is by asking them to discuss a time when they took initiative. Be specific and ask follow-up questions to see what they did in a certain situation. Ideally, if possible, you should ask if you can call some people for a reference to verify that the story is true.
Credibility And Skills
You want a partner that will complement you well. It’s probably a good idea to understand your strengths and find a partner will bring something different to the table.
You can verify credibility by looking at past accomplishments. Check out their educational background, work experience, and success on previous projects. Along the way, you’ll get a sense of the skills they may have developed.
The Willingness to Adapt
Businesses change constantly, and you want to be working with someone who understands this and takes it in stride. Rigidity kills great businesses, and the last thing you want is to fight with your partner about making progress.
A few years ago, I partnered with a friend to build a new product. Several months in, I realized that our product was actually going to be obsolete by the time we were ready for launch. We needed to reposition things if we wanted to make any money.
But my friend was adamant. He was convinced that the original idea was good and that the market would never change. Our disagreement on this issue caused a tremendous amount of tension. In the end, our project failed because we couldn’t agree on how to move forward.
The takeaway here is that you want to build businesses with people who are not only willing to adapt, but accept the fact that it will almost certainly be necessary as things change. Otherwise, you risk losing everything you’ve worked to build.
Acceptance of Constructive Criticism
Constructive criticism is a great learning tool, but it’s amazing how many people resist it. It makes sense – no one likes to hear about their flaws. But it’s the only way to make sure that you fix problems and keep improving as a team.
A good way of gauging this is by asking people some tough questions upfront. Ask people about a time they failed or struggled in their lives, and see what they learnt from it. This way, you’ll get a sense of whether they can take things in stride.
One of my pet peeves is when people say they’ll do something and they don’t end up following through. I’m sure that I’m not alone in this. The best way to prevent this is to partner with people who are very clear about their capabilities and expectations. It’s better to work with someone who will bluntly tell you that they are unable to do something (due to time constraints, skill levels, etc), rather than deal with a “yes-man” who’s just going to yank your chain. You’ll save time, money, and reduce your stress levels, so don’t compromise on this.
I recently met Michael, a very successful businessman who is also the father of a close friend. After working his way up at a large consulting firm, he left to start his own business with a fellow partner. Michael had known the partner for many years and they had worked closely together in the past, and for awhile everything was going well.
One day, Michael checked the company’s bank balance and was astounded to find a large sum of money missing. He tried calling his partner, but could not get in touch. Days passed, and still no reply. Eventually, Michael found out that his partner had gotten into financial difficulties and had been stealing from the company.
The point is that all of the other good qualities above don’t mean anything without trust. Only work with people who you believe hold the highest ethical standards when it comes to business. It’s rarely easy to tell whether someone is trustworthy just from personal interaction, and that’s why it’s important to conduct reference checks and other verification methods to complement your face-to-face evaluation.
Above all else, remember that picking a business partner is a big decision, so take it seriously.
Have you ever had a business partner? What were the things you looked for and what would you do differently?
Vik Tantry is an internet entrepreneur who writes about money and personal development at There’s Money Everywhere.