Small Business - Choosing a Business Partner
Published July 10th, 2008
Some people believe that the summer season is the season for weddings and bringing people together. To the contrary, this summer I have found myself advising a few of my clients on effective strategies to break up their business relationships with their partners.
Some of these partnerships have been in existence for many years and a few of them are still in the newlywed period of their business relationship.
I can still remember a few of these partnerships signed, sealed and delivered in my office a few short months ago where all of the individuals were describing how excited they were having found the most perfect partner. It is therefore extremely interesting how those same individuals are now ready to leave this perfect partner behind.
No different than choosing a spouse, life mate or significant other, choosing a business partner is a very complex process that you should not jump into without taking some immediate precautions and actions to ensure a good long term relationship.
Right Partner
If having a business partner is the path that you choose to go down then finding the right business partner is not only essential but critical for the success of your business during all of its business life stages: beginning, middle and end.
Before you choose this person, make sure to carefully consider the major issues that are truly important in securing the right business partner. The paramount question that I advise my clients to carefully think about is: what is your purpose for bringing in this partner?
If you’ve asked yourself that question, and have come up with a few affirmative, well-thought out and responsible answers, then you are ready to tackle the additional issues that will establish the framework of your future partnership.
A good partner is a partner who shares similar business values and principles. A good partner is one that understands the business, its history and its potential in the future.
A good partner is one that has listened to what your vision is for the business and has a common goal for moving down that path of success with you. A good partner is one who can and will add to the overall success of the business in many ways.
Specific Issues
Once you have tackled all of the big picture type of issues then you can move on to the specific issues that must be addressed. Is your future partner going to be an active participant in the business or a passive participant?
Is your future partner going to be a financial part of the business or strictly operational, or both? Have you established the type of commitment required by your future partner? Have you and your future partner discussed the expectations that both of you have, for one another as this relationship progresses?
Does your future partner bring the temperament, work habits, aptitude, attitude, relationships and personality for you and the business to succeed? Finally, ask yourself, am I prepared to publicly announce that this is my business partner, without hesitation or reservation?
If all of these questions have been answered in a positive manner and you are comfortable with your choice of a future partner then I advise you to do a few “last but not least” activities to seal the deal. Contact an attorney or a private investigator to conduct a background check on your future partner. You need to know your future partner’s history such as any criminal background, financial issues such as bankruptcies, and any other items that will go to the credibility and morality of this individual.
The last and most critical piece of advice is to make sure that your relationship with your partner is in writing and covers all issues between the two of you. More specifically, if this partnership does not work out, who is going to buy the other out and what is the mechanism for that to happen.
Ian M. Berkowitz is a former attorney/advisor with the United States Small Business Administration in Washington D.C. During his tenure with the Federal Government he specifically worked in the areas of disaster relief for homeowners and businesses and government contracting. He is currently a practicing business and real estate attorney in Boca Raton. In addition to his law degree, Ian also holds a Master’s Degree in Government from The John Hopkins University.
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