Taking on a business partner is an exciting occasion. But before you pop open the champagne and visit your favorite restaurant, you should take time to conduct due diligence. Your business partner could be a friend or it could be a stranger you met at a business conference.
Regardless of their relationship with you, it’s important to look deeper into this issue.
Do They Have Any Business Experience?
Figure out whether they have any real business experience. Take note that just because they don’t have any business experience doesn’t mean they can’t join your company as a partner. It merely changes their role. There are plenty of business partners who simply invest without partaking in the primary decisions made by the company.
Don’t just ask them about their business experience find out for yourself. You could even hire a private investigator to find out more about them. They’ll be able to dig up their business history. It’s always best to have a second-opinion rather than taking what they say at face value.
What Do They Get in Return?
A business partnership can take a variety of different forms. Are they receiving a salary from the company? Do they get to claim expenses? Are they receiving direct equity?
This must be established before you accept someone as your business partner. Ask what they want, negotiate, and then get the final agreement in writing. You want something to be legally binding to avoid any problems later.
How Do They Act Online?
The online world is so important for a company’s reputation these days. Repeatedly we’ve seen companies take a big hit simply because of what people said in a moment of weakness. You can find out a lot about a business partner by inspecting their online presence.
If they constantly post controversial content do you really want your company to carry that sort of baggage? Someone’s online activities will rarely be a deal breaker, but it’s good to take it into account.
What are Their Views on the Direction of the Company?
It’s easy to look at values as something you put on the company website because you want to impress people. But anyone who has worked as part of a successful setup understands values are critical to the way the company is run and where it’s going.
You need to ask your prospective business partner what are their views on the direction of the company. For example, if they want to expand the original product range, it’s not going to be compatible if you see the company moving into consulting work.
Sometimes different views and values are reconcilable, but this is something you need to look into yourself.
What are Their Personal Goals?
The chances are you don’t have the same personal goals. Your personal goal might be to run a successful company. Your business partner’s personal goal might be to retire by age 40.
Don’t see a difference in your personal goals being a major problem, but someone’s personal goals can say a lot about how they’re likely to run a company.
Are they going to be willing to work long hours? Do they want to work for low pay in the short to medium-term? Are they really committed to the company itself or do they just see it as a chance to make money?
Last Word – Choose Carefully
A business partner can make or break a company. Don’t be the entrepreneur that goes into a relationship blind. Do your due diligence on any business partner and answer whether they’re suitable for you or your company.
Have you ever taken on a business partner before?