Note: Start-up money is not a reason to pick someone as a business partner. Those people are called investors.
The first thing to do is decide if having a business partner will actually benefit you. If you’ve decided you need a business partner in order for your business to succeed, you should choose this person based on these factors:
If you lack a skill necessary for your venture to be successful, it makes sense to find a business partner that has that skill. For example, let’s say you want to create a new tool for plumbers. You have all the ideas on how it should work, but you don’t know anything about the mechanical engineering involved in actually prototyping and creating the tool. You can partner with someone who has that skill set. Then you can combine your idea and the engineer’s skill to make the product come alive. You typically shouldn’t partner with someone who has the same skill set as you. This will lead to an unnecessary splitting of profits when a partner isn’t really needed.
In cases of lacking a skill, you should also consider whether hiring someone instead of offering partnership might be a better idea for you in the long run. It might cost you more upfront, but it could save you a ton in the long run. This is going to depend on the need frequency and the availability of the skill.
You might find 100 reasons to partner with someone for your business, but unless your personalities are compatible, you risk failure at a much higher chance. I’m not saying you have to be best friends with your business partner—I’m not even saying you have to like him, but make sure your personalities work well together. I have a business partner at my creative agency, Stephen, and we have a lot of things in common, but the thing that allows us to work best together is our biggest difference. When I have a new idea, I want it executed immediately, and sometimes that leads to things not being properly thought out. Alternatively, Stephen can sometimes be a little too cautious with a new idea. When we mesh these two personality traits together, we create well-thought-out ideas that are executed in timely manners. Most importantly though, be sure there is an established, mutual respect before going into business with someone.
Mutual respect is the key to a healthy business partnership.
Another important factor when choosing a business partner is determining whether or not your business goals align. If you’re looking to slowly grow a business that provides long-term wealth, don’t choose a business partner who is looking to get quick money and cash out while the hand is hot. It’s vital that you are on the same page as your partner when it comes to your short-term and long-term business goals.
A lot of new entrepreneurs make the mistake of thinking they have to split profits 50/50 with a business partner. Don’t make that mistake. A lot of factors have to be taken into consideration such as idea creation, lead generation and networking potential, industry experience, and level of skill in the applicable field. Before you start anything, write up a fair partnership agreement to ensure you both are on the same page.
Choosing the right business partner is one of the most important aspects of starting a business. If you decide you need one, consider what skill(s) you’re lacking for success, what personality will be best for you to work with, what your business goals are, and what you consider a fair agreement for splitting profits.