Posted by Maria Dimitrova
Gain: Finding someone who has complementary skills and experience and similar work ethics, values and goals so that you can help each other achieve much higher level of success and profit
Cost: Time and careful consideration and implementation of the necessaary practices to ensure a successful partnership, minimizing the risks and optimising the potential benefits
Finding a business partner can bring a huge amount of benefits for your business and become a milestone in its expansion. On the other hand, if the partnership fails and you haven’t planned an exit strategy in advance, it might cause immense damage to your business. It’s a big step you have to be prepared for so that you minimize the risks and derive as many benefits as possible.
Pros of having a business partner
- More financial power – you can afford to invest in equipment or other kind of assets which will bring your business to a new level.
- Divide and conquer – it’s hard to do everything. One of the best things about having a business partner is that you can divide tasks and not worry about every aspect of your business. Also, you will be able to specialize in 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 overcome hurdles.
- Ideas– Innovation and creativity are an essential competitive edge in business. If you can’t come up with any ideas, you can always ask your partner to help you brainstorm. Innovation is an essential competitive edge in business.
- Network– If you have a business partner not only can you draw upon your network, but also you can reach into his or hers.
Some of the biggest companies like Google and HP have been created by business partners. Rumour has it that Google’s co-founders Larry Page and Sergey Brin did not become instant friends and were actually quite antagonistic towards each other, arguing over almost anything. Page found Brin ‘obnoxious’, because of the strong opinions he had on almost anything. In spite of that, he appreciated the talks that he had with Sergey for the keen mind that he exhibited. Obviously, they managed to settle their arguments in a constructive way so that both of them achieved a world-renowned success.
However, not all partnerships survive the inevitable differences that occur between two people.
The most common mistakes business partners make
- Create a partnership without a having discussed in details your long-term goals, your business plan, your roles, resources investment (including time spent on the business). You need to know that you are on the same page about all these things. You may both strive for success but for one of you it may mean building a $100 million company, while for the other – making a nice living.
- Not stipulating how to make decisions and resolve disputes. According to small business expert Andrew Sherman, a partner with Jones Day (in Washington, D.C.), you need to make sure that small sparks don’t turn into wildfires. For most decisions, it’s usually best to agree that, for example, sales issues ultimately will be handled by the partner with expertise in that area, while the more-finance oriented person will have more authority in the case of financial disputes. But, in more difficult situations, you can also turn to an advisory board or a consultant for help.
- Not spelling out important partnership issues in a legal document. If the partnership begins to fall apart, there are no formal, objective rules for anyone to follow. Sherman advises: “You need a game plan for what will happen if and when things don’t work out. Although morbid and unlikely, you’ll also want to stipulate that if your partner passes away, you’ll have first right to buy out his or her side of the business. That’s so you don’t wind up with your partner’s widow, who may or may not know anything about the business, as your partner.”
What to look for in a business partner
It’s important to find someone who:
- Shares your Values, Entrepreneurial Spirit, and Vision
- Can bring Skills and Experience to the business
- Can offer Resources and Credibility to your business
- Is Financially Stable
- You Respect and he/she Respects You
Opinions of entrepreneurs vary on the issue how long you should know someone before taking the decision to offer them a partnership. Some say the period should be not less than 6 months while others say it had taken them only a few meetings with their partner to get the strong feeling they have common values and goals and mutual trust has been established.
A wide-spread opinion, especially among entrepreneurs who’ve had their share of failed partnerships, is that no matter how close you are with your business partner (a family member, a friend, a spouse), you need to ensure that personal relations are separated from business relations and when putting the beginning of the common business, the same rules apply like in all kinds of partnership – a necessity to make a business plan, an exit plan and legal documentation for all important issues concerning the business.
An example of a successful partnership between a mother and a daughter:
Good places to find a partner
- 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)
- Websites like Partnerup.com
Two entrepreneurs share:
“I started looking for a business partner who could bring marketing and business development experience to the company. I spent like 9 months talking to everyone that I knew and attending practically every networking event that I heard of. I shook a lot of hands and met some nice people, but I wasn’t able to find a single person with a marketing and business development background and knowledge of the travel industry.
Just as I was starting to think that I wouldn’t be able to get this thing going, I heard about PartnerUp from a friend. So, I checked it out, posted the position that I was looking to fill, and started getting a steady trickle of responses coming in. I kept getting a few inquiries every couple of days and a few weeks after posting on PartnerUp, I found someone who’s personality and experience matched perfectly with what I was looking for. So, we chatted on the phone a few times, then hooked up for coffee here and chatted about it, and then got together a few more times to talk through ideas and put together a formal business plan. We just finished putting together the business plan and writing up our partnership agreement two weeks ago and he’s now working on naming the company and building a brand while I’m working on getting an alpha version of the site fully built out.”
“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.”
Before deciding on finding a business partner, consider whether your personality is suitable for this type of business relationship. Your mindset is crucial as well as having very good negotiating skills. Some people dislike sharing the decision-making process with someone else or are too competitive by nature to be able to collaborate and share the credit for success. If you don’t fall into this category of people and have the right mindset, finding a good business partner might be a rewarding experience with countless benefits like the one an entrepreneur has had and shared about it in an Internet discussion regarding partnerships:
“I LOVE working with my partner. She’s an excellent business woman and very energetic. We pump each other up when energy is low. She asks questions I haven’t thought of and vice versa. Its great to have someone to bounce ideas off of and get opinions from someone who is equally invested. Also, when you have someone to share the burden, it doesn’t seem as heavy or daunting.”