No matter how independent or skilled you are, there are projects or events you can nail better when you work with someone. But having a partner in collaborations does not guarantee you milestones on your project.
How to Find the Right Business Partner
Similar to any relationship, you need to find the right partner to increase the chance of succeeding in what you do. Otherwise, you can benefit more from being on your own if you stay in an incompatible partnership or work with someone who lacks the level of skill, set of beliefs, and passion that you have.
We can apply this principle not only in your relationships but very much in business. More often than not, starting and growing your venture with a business partner greatly affects its dynamics.
Having the right business partner and collaboration gives your business more potential for growth. As the saying goes, “Two heads are better than one.”
On the other hand, if your business partner cannot grow the business and adds to liabilities rather than an asset, then maybe it’s time to review your business plan.
Having the right partners in business is an advantage. But the decision is still yours. So, we’re here to help you reflect on whether you need a business partner or not.
If you need a helping hand, you must first apply these tips on how to find a business partner who can walk with you towards success, not with someone who can cripple you in the process.
Advantages of Having a Business Partner
Working with a business partner – the right one for your business poses major advantages.
You can learn and exchange entrepreneurial skills from each other, maximize your time and energy by sharing your workload, and get to see other points of view which are crucial when running a business. On a lighter note, doesn’t it feel great when you share your success with someone too?
Here are more ways you can lead the business world when you work with a business partner:
1. All Must-dos are Met
Inspired by the great teacher and author, Helen Keller, alone we can do so little, but together we can do so much.
With a lot of things you need to do to grow your startup – market research, sales pitches, lead generation, networking, more research, meeting and impressing your potential clients and investors – doing these alone can overwhelm you even during the early stage of the process.
You also need to consider that hiring employees may not be ideal yet due to a lack of resources. Thus, working with the right business partner can help you manage the workload and make sure all of these are done.
2. The Need for Objectivity
Humans as we are, there are times our emotions drive us to make decisions that might not be beneficial for the business. This is where the need for having the right business partner comes in.
You need someone to serve as your peripheral vision to put things in the right perspective. No matter how confident you are in your ideas as a successful entrepreneur, it is more ideal for things to be objective. This can be achieved when collaboration happens between or among business partners.
3. More Skills, More Success
Here’s a hard-to-swallow pill for you: you don’t have it all! You can be great at marketing and sales, but you might need someone to focus on the admin side of the business.
Building your startup with the right business partner means bringing in more skills to the table which can help your business go to the next level. Working with a business partner also allows you to enjoy more time outside the business and explore more ideas since you can conserve time and effort.
4. Another Stream of Networks
Your skills and passion are fundamental in building your business, but the right networks and expanding them can make it grow faster.
Hence, having business partners multiplies your opportunities for more contacts, potential clients, investors, and sources. Of course, this can result in more streams of income too.
5. Accountability and Evaluation at Hand
It may look easy-peasy for others, but staying disciplined and motivated to keep your business going is a different struggle. Feeling halfhearted or unmotivated especially when the progress is slow is usual especially if you are an aggressive type of entrepreneur.
That is why you need a business partner to remind you to fix your eyes on the goal and have the end in mind especially when the going gets tough.
Successful businesses built on great partnerships have their owners hold each other accountable for each other’s limitations and mistakes. As King David needed Jonathan, you also need a business partner who can call you out and help you get on track again.
Believing in yourself is far different from being full of yourself. This is stressed by a successful businessman himself, Warren Buffer. With the right business partner, you can explore and pursue new heights, refine your ideas, and prevent more business mistakes.
Disadvantages of Working with a Business Partner
Working with a business also has its share of disadvantages. These are the things you need to watch out for.
1. More of a business liability than a business partner
To start with, you are getting a business partner- someone who has the same or exceeding the level of passion, experience, or skills you are giving to the business.
Having someone who fails to deliver the tasks adds to liabilities. Worst, your business may fail due to complaints, dissatisfaction, and negative reviews from your clients.
2. Differences in Beliefs and Work Ethics
You and your business partner may have the same goal, which is for the business to succeed. However, attaining that goal entails great responsibility, time, and effort. Are you and your business partner on the same page? Does he actively participate in the building process?
Business partners with questionable habits can also drive your business down. You may be familiar with them or claim that you trust them enough, their ethics may be put to test in terms of handling finances. Be aware of how they can affect your business and reputation.
3. Disagreement on Direction
You and your business partner do not have to agree all the time. But you do not jive with your principles and practices, this can cause major problems in the business.
Spending too much time coming up with decisions even for the smallest of things can confuse your employees and create division in teams.
You must avoid the team seeing you and your business partner as two different entities which may result in fandoms, disrespect, and inconsistent business practices.
4. Profit Concerns
Since you share responsibilities, your business partner also has his share in the profits. This is a celebration for most entrepreneurs if their business partner brings revenue and profit to the company.
However, this can be unfair on your end if your business partner‘s efforts do not justify the amount of his share. If you have been doing things on your own or you have been receiving the same profits as you do without a business partner, it may be time to review how business partnerships work.
5. Your Partner’s Fault is Your Liability too
This is such a risky part of having a business partner. You do not just share the profits with someone who does not add value to the team, but you also share his misery.
If your business partner violates legalities, you may end up in court as well. Worst, if the law states that you are part of any liability or misuse, you can be imprisoned too. This does not just damage your reputation permanently, but this also marks the end of your business venture.
As you see, having a business partner has its pros and cons. Another set of eyes and hands can make your business grow and pave your way to success in a short period. However, if you find a business partner without caution, you are just looking for someone to shut the business off.
So, in all aspects of your life, especially in business: choose your partner carefully.
What to Consider Before Working With a Partner
Now that you already jot down the pros and cons of working with a business partner, you also need to evaluate why you want to work with them. Here are the reasons to help you assess whether you want to enter into a small business partnership.
Good Reasons for Entering into a Business Partnership
Aside from the need to decide what business to start, there are important factors to consider why you need to enter a business partnership.
Create a business partnership for the right reasons. Good reasons for entering into a business partnership include:
- If your business needs help in technical, marketing, networking, finance, or operations management but you lack training or experience in these niches, then you need a business partner who can focus on these aspects.
- If your business is growing or has a complex model, then you need another hand to handle it. Find a business partner who can complement the teamwork. A business partner whom clients can speak with or trust is also great access to the company.
- If you want to grow your success in a shorter amount of time, your potential partner should be someone who also excels in the field and demonstrates the right attitude and skills useful for the business.
- You are a team player and work well as part of a team. Many people thrive in a team environment; if this describes you and you have an excellent candidate for a team member, you have a good reason for entering into a partnership.
Bad Reasons for Entering into a Business Partnership
A number of times we have mentioned that entering into a partnership is beneficial for the business. But if you enter a business partnership for the wrong reasons, it can do more harm to your business.
Here are the red flags you need to watch out for within yourself as you decide on entering a business partnership:
- If you just need someone who will nod each time you make a decision, then you might be looking for a “yes man” rather than a business partner. One of the things to look for in a business partner is someone who is professional to give you feedback to make the business successful. A business partner is someone who supports you in your venture. But he is also that someone who prioritizes the sake of the company rather than pacifying your ego.
- If you are looking for someone to replace you and by solely leading the business, then this might not be the right time to enter a business partnership. You need to be present along with your business partner in growing the business. Otherwise, you may find yourself and your business in a liable position if your partner fails to fulfill his role.
- Going into business with a friend for the sake of bonding and nurturing the friendship is the right motivation when entering a business partnership. Choose your friend as a business partner due to his skills and passion for growing a business and never for any sentimental reason.
To reiterate, if you want to work with a business partner who thinks and acts exactly like you, you might need to pause before you collaborate with him in a business partnership. Partners in the business challenge each other to grow the business.
Once you have already reflected and decided to enter a business partnership with all the right reasons, then it’s time to observe the process of choosing a business partner.
The Process of Choosing a Business Partner
Expert businesses say that finding and choosing a business partner must be taken seriously by looking for a spouse. Treating your business as a child, nurturing it, and making it grow as a parent is similar to how to become a business partner. Thus, you need to have a business partner with the same passion, commitment, and strong parenting philosophies that you have.
Having a business partner who shares the same values, passion, and spirit is the most important factor to consider. If you are not on the same page, it will be difficult to drag your business to succeed. Here are more of the green flags to look for when looking for a business partner.
Be and Find a Business Partner with Resources and Credibility
Aside from having connections and financial resources, there are non-negotiable factors such as values and beliefs a business partner can bring to grow your business. A business partner with a decent reputation, relevant skills, and credentials, and strong connections in the field increases the worth of your business. Utilizing these advantages can maintain the business in a long-term period.
Look for a Business Partner with Outstanding Personal and Business Ethics
Create and enter business partnerships with someone with the right habits and disposition in life.
Someone who demonstrates a positive attitude outside the business is most likely to bring it into business. A potential business partner who has a reputation of dishonesty, legal issues, and backstabbing may take you into trouble.
Be and Find a Business Partner who Knows how to Respect
Respect, aside from trust and honesty, is an important element in any partnership. Without it, the team will be least likely to succeed. Find a business partner who respects you and the team.
You also need to observe and respect your business partner and the people who work for you.
Have a Partner That Can Bring Skills and Experience to the Business
From the beginning of this article, it has been reiterated that you should find a business partner who has skills that complement your set. The more skills you and your partner bring to the business together the easier it will be to start, plan, grow, and run your business.
Find a Business Partner First
If you choose a friend who has serious challenges in his/her personal life as a business partner just to help him in his finances, it might hurt your business in the long run.
Supporting your friend is a nice gesture but you need a business partner who can focus and give time and energy to grow the business.
Plan Ahead with Your Business Partner
No matter how much you prepare and carefully analyze the process, unexpected things may happen in your business partnership. That’s why no matter whom you choose as a business partner, you need to put all business agreements in writing.
Pros and Cons of a Partnership
Just to ensure it is clear what a business partnership is, it is formed when you and a potential business partner or party collaborate to grow a business and share responsibilities, losses, and success.
This can also be regarded when business entities like limited liability companies or corporations come up together to form a bigger business venture.
If you are an engineer who wants to start a business in creating houses, you might want to collaborate with an architect and start a firm together. It is also possible for pharmaceutical companies to work with a hospital and endorse certain medications.
Regardless of the two, always remember to have a written contract with detailed terms, signed and acknowledged by both entities or parties.
Pros of a Partnership
A business partnership can be an advantage for many reasons. Here are some of the benefits this entails.
You have someone to share your responsibilities with
Aside from having someone to share your financial concerns with, you can also share with your business partner the responsibility of managing and operating the business as well.
Unless you operate on a limited partnership, your business partner can also oversee business operations and study some things before you come up with major business decisions.
You learn more
Having a business partner is not just about running the business with the ideal level of efficiency and productivity as compared to how much you can make when you do it alone. If you have a business partner who is also ahead in the business, has enough skills and experience, then you can make more informed decisions and learn more in the process.
Time again to say that it is best to have a business partner who excels in areas where you need to improve at. You may also consider having a business partner who has an existing business if you are just starting in the field.
You manage your financial concerns better
One of the coolest perks of having a business partner is lessening your financial burden. It is expensive for most parts to start and run a business, so if you have an equally capable business partner, you can set the business off way faster.
Cons of a partnership
A business partnership also has its own share of limitations. Here are some to look out for.
You can’t decide on your business right away
Some opportunities require a decision in a snap. Having a business partner who is unresponsive or struggles to make quick decisions can lose your grasp towards success since you need to be mutual in your decision.
To get your way out of this, find a business partner who can manage his time in making decisions or set an arrangement for these kinds of circumstances.
You’ll have conflicts and differences
Just like in any partnership, you and your partner may not always agree with each other.
However, if the differences in perspectives already affect the flow of the business, or you have an unresolved issue for a long time already, the partnership may no longer be beneficial for you. Personal issues may affect business partnerships too so you better manage to set this aside.
You cannot take the profits by yourself
Since you share the capital and efforts, you must also be prepared to receive your profit in half. This is typical, but if you are giving more of your efforts and resources, yet receive less than what you deserve, it’s time to discuss this with your business partner.
You are your business
Once you enter a business partnership, you also marry it. Thus, you and your partner are legally and financially accountable for any growth or loss a business makes.
If your business partner commits a legal violation and eventually gets away from it, you would have to face it. If your business partner commits fraud, for example, people will come after you and you might need to exhaust your money.
Questions to ask when going into a business partnership
Before we wrap up, here are questions to guide you in deciding whether to go into business with a partner or rather go alone. Reflect on these questions to ensure your business growth.
Is my business partner’s style compatible with mine?
Before entering a business partnership, step back and reflect if your business partner’s style in running a business jives with yours. It takes two to tango to keep the business going.
Having a business partner is like having a spouse in your marriage. It is a serious decision and you must be with a partner whom you can work well with for a long time.
How certain are you that you want to do business with others, or would you rather go it alone?
Working with a business partner has a lot of advantages as we discussed in the article. However, it does not mean that you need to adopt it even if it does not fit your business style.
If you find yourself being effective by simply working alone or making decisions by yourself, then you can still work alone. Entering a business partnership is just one of the many business structure options you can choose from.
Are you comfortable with being held accountable?
One of the cons of having a business partner is being financially, legally, and sometimes emotionally accountable for his business limitations and liabilities. Are you ready to face the possible consequences the business partnership might bring?
What type of partnership do we want?
You do not have to stay in a business partnership that does not match your values, capabilities, and resources. There are other structures that might fit your business partnership. Make sure to study each and consider its pros and cons.
What additional documents do we need?
When starting a business partnership, secure a partnership agreement. Be prepared in organizing other business documents too.
A successful business owner must also oversee the flow of the business and have a backup plan in case your business partnership did not go as planned. Always record your transactions and keep track of your business finances. Having an exit plan in the event your business partner wants to resign from the business must be prepared beforehand too.
Entering a partnership and finding a business partner are equally two of the most challenging and life-changing decisions you will make for your business. He can be your greatest asset or worst, the reason for your business to fail.
Before you throw your yes or no, it’s important to review the pros and cons a business partnership has to offer.
If you say yes to this relationship, be serious about expanding your network to find a business partner who has the qualities we discussed above. See if your potential partner demonstrates the ideal partner description.
Do you have a business partner? What were some of the considerations you addressed, and how has the arrangement worked out so far?