Many business owners envision proposed partnerships as opportunities for unparalleled growth. In truth, business partnerships can prove beneficial under certain circumstances, if the partners are compatible and enter into the relationship with realistic expectations. On the other hand, sometimes hiring an employee suits the situation better than offering someone a stake in your company. Here are some things to keep in mind when considering potential business partners.
Although similar personalities and skills may help you get along, what your company may need from a partnership is a balance in skill sets. For instance, if you prefer to remain behind the scenes, you may benefit from a partner who is outgoing. If you are excellent with details and statistics, perhaps what you need is a partner who comes up with creative ideas.
Sooner or later most businesses encounter crisis situations, so it’s important to know how potential business partners would react under pressure. Research past business situations to find out how the person you are considering acted when faced with difficulties. Interview former employees and prior business connections. Find out if the person’s current financial status and obligations could cause them to compromise the decisions they would make in your partnership.
Encourage potential business partners to be upfront about any concerns they have about your background and character. Answer their questions honestly and straightforwardly so that trust becomes the basis of your working relationship.
For business partnerships to work, both sides need to be equally committed. Many relationships begin in optimism, but the ebullient facade quickly wears away in the face of inevitable difficulties and crises. Be sure that your potential partner is willing to invest the necessary time to help the company succeed and that no personal or family distractions will prevent them from getting the job done. Seal the commitment by putting everything in writing, including the consequences of negligence and escape strategies in case things don’t work out.
For more advice on forming successful business partnerships, contact IRC Commercial Lending.