Finding the right business partner isn’t easy. I have been an entrepreneur for about 8 years and I have been through my fair share of business partners. And although I have been blessed with having some great partners, I have also had a few that didn’t work out.
The business partners that didn’t work out weren’t necessarily bad guys and they didn’t do anything wrong, but for one reason or another things just didn’t work out.
Now before I go into finding the right business partner, I want to break down some reasons on why you should have a business partner:
- Manpower – hiring employees is a great way to get more things done, but when your business isn’t making much money it can be hard to afford talented people. If you have a business partner you can get a lot more work done without worrying about paying a high priced employee.
- Divide and conquer – it’s hard to do everything. One of the best things about having a business partner is that you guys can split up tasks and not worry about every aspect of your business. Plus you will be able to specialize on certain tasks, which will make you more efficient.
- Motivate – as an entrepreneur you’ll experience a lot of ups and downs. Sometimes things will be going great and other times they won’t. By having a partner you can motivate each other to stay on top of things.
- Ideas aren’t a dime a dozen – when you think of something cool and want to bounce it off of someone, what better person to do so with then your business partner? And if you can’t come up with any ideas, you can always ask your partner to help you brainstorm.
- Network, network, and network – you can never have a big enough network. If you have a business partner not only can you tap into your network, but also you can reach into his or hers.
Now that you know why you need a partner here are some things to you should know about finding the right one.
A business partnership is like a marriage
Before you pick one, you need to really understand that it is like a marriage. Once you enter into a partnership you’ll realize that things won’t be perfect and you will get into fights.
Don’t worry this is natural. Fights are typically good because they will help you progress and move forward. Just make sure your fights aren’t physical and filled with emotions. Both of you have to be logical.
And don’t expect to break off a partnership when things aren’t going well. You have to work through things because a divorce can be detrimental to your business.
Don’t put too many cooks in kitchen
Time has proven that the ideal number of partners to have in a business is 2 (one of them being you). You could have 3, but 4 is typically pushing the boundaries. If you have too many cooks in the kitchen you’ll notice that you will waste too much time making decisions and bickering over small things.
From my personal experiences I have always found that the ideally number of business partners to have is 2 (one of them being you). When there are more partners things can still work out, but you don’t really need all of them. You can typically hire employees to fill the voids in your company.
Never stop looking
You won’t know where you are going to find the right business partner, so don’t stop looking. For example, I have been to hundreds of trade shows and networking events, but I ended up finding my business partner through my sister.
In general a few good places to find partners are:
- Local networking events (you don’t want someone that lives far away from you)
- Industry events
- Friends and family
- College (if you are still in school)
Don’t jump the gun
Once you feel that you have met the right person, don’t get ahead of yourself by trying to get into bed with them. Before you make them your partner you need to get to know them.
In addition to that you need to get to know their family if they have one. Not only can their spouse affect your partnership, but their parents and siblings could too.
Typically if you don’t know someone for at least 6 months you shouldn’t jump into a partnership. There is nothing wrong with waiting because you can’t really get to know a person in just a few months.
Set expectations from day 1
Before you seal the deal you have to set the right expectations. All of my business partners that worked out did so because we both set the right expectations from day 1.
You have to know what each of you are going to do before your partnership even starts. This way if one of you doesn’t do what you are supposed to do, you can get each other back into line.
One thing to note is that your partner’s duties will change over time so on a monthly if not weekly basis you should check with him or her to make sure that you know what each person is doing.
You aren’t doing this to babysit each other, but you are doing this so that you don’t step on each others feet. Knowing what each person is doing will also allow you to provide each other with help if you guys need it.
Seal the deal
Now it’s time to seal the deal. You could do so with a handshake, but the best way to do this is through a lawyer. Make sure that both of your names are on the LLC or incorporation. This way each partner clearly has an understanding of what percentage of the company they own.
If you don’t create an incorporation or LLC you could run into problems later on. And these problems typically won’t arise early on, but they will arise when the company starts doing well.
Not only does it take time to find the right business partner, but also you’ll pick a few bad ones along the way. Don’t get discouraged by this because it happens to the best of us.
Just keep your head up and keep on moving forward. If you never try to find a good business partner your business will never flourish.
As one of my friends explained to me, his current business will never be worth 38 million dollars like his past company. It isn’t because his current business idea isn’t a good and it clearly isn’t related to money, but it is because he doesn’t have a business partner.
Update: As Scott mentioned below, you want to make sure that your business partner’s shares vest over time. This way, if your partner decides to quit working with you after a few months, he or she won’t be able to walk away with half of your company.