from SmallBizTrends.com 05 March 15 enhanced by Peter/CXO Wiz4biz
Should you consider business partnering? A partner can be your best asset or your worst burden. But not all startups need to be partnerships. Your circumstance dictates your decision. Even more important than this decision is the choice of the “right” business partner.
A. Do you need a Startup Partner?
Before you decide to do Partnering, who can be an appropriate partner in the venture, you need to pay attention to this basic question. The answer is in the affirmative in the following circumstances:
1) Your Startup is Complex. A new venture requires effort in every aspect. Apart from the core business idea, there are numerous things you need to take care of – formalities, taxes, accounts, finances, contacts and many others. If the new business is of a complicated nature, the chances are high that you would find it difficult to do everything on your own. Hiring employees is often not an option for a new business, as it would mean more worries about overhead costs, taxes & salaries. You need a partner who can handle some of the tasks and ease your burden.
2) You lack Knowledge & Experience in a Certain Area. Accept it; no one can know everything. You can be very good at technicalities, but very poor at sales & marketing. This often creates an imbalance in a new venture. Suppose your startup is about selling computer applications. Even if you have extensive knowledge and experience in computer applications, you may fall short of success, if you fail to focus on another aspect of the business – the selling of the products. You need a partner who can complete the perfect set of skills & expertise needed.
3) It requires Teamwork. Some people work best when they are in a team while others achieve success as a loner. If you are a Team player, you may find it difficult to work on your own when you start off. Moreover, some businesses require diverse skills to attain success. A Team is better suited for such ventures. When you team up with someone who fills the gaps and brings another perspective, your chances of success increase. You need a partner to make the Ideal Team for your new business.
B. Who should be your Startup Partner? Attention to the dos & don’ts is essential to make this choice. The right characteristics in your partner can make your business a success; the wrong ones can ruin your chances.
1) Choose someone you Trust. You cannot build a successful relationship, if you don’t have trust as its foundation. The same applies to business partnerships. You need someone you can trust and someone who can trust you. If you cannot trust your partner, you would only end up wasting time & effort monitoring them. It would do more harm than good. Make sure the partnership is based on mutual trust.
2) Don’t Confine your Choice. A brother, a spouse or a friend can seem to be a great partner for your small business. Such a partner may be easily convinced about your idea. It may also be easier to accumulate funds when you have a family member or friend as your partner. But don’t let a relationship dictate your choice of a business partner. Your brother may be good at handling accounts, but he needs to be much more than that to be a practical choice. If he can add value to the business, he is the right choice.
3) Find someone with the Talent your need. You need to find someone who can compensate for the areas are weak in. Choose someone who completes the talent your Startup needs – with regard to knowledge & experience to ensure that your business is a success. An equal can be an ideal partner. But, if you choose someone way ahead of you – in terms of knowledge or experience – you may end up as a “follower”. If you choose someone who is way behind, you may end up with a “burden” instead of an asset.
4) Don’t Compromise on Ethics. Have extensive discussions with a potential partner about your business ethics & practices, before you make the selection. At times, the little differences can snowball into big problems. An unethical or unscrupulous partner can ruin the reputation of your business. He/she can cause other problems too. You need to trust your partner; but if you trust someone like that, you may end up in big trouble.
5) Have Mutual Respect. A high opinion about someone can make it easier to create a successful business partnership. If you don’t have respect for your partner, things can become difficult in the long run. A trustworthy, talented and admirable individual can prove to be an appropriate business partner. But you need to make sure that you two share the same values & principles – yet may have different perspectives to make a winning partnership.
C. Partnering Agreements. One of the most important agreements that startups need, but frequently fail to put in place, are partnership agreements. You need to define which area each partner is responsible. In the early stage of a startup, the partners in the operation are all in sync, and cannot imagine ever having a thought or goal that is not aligned. The partnership agreement anticipates this unfortunate, but common evolution of a business relationship. The terms of these agreements will set out the manner with which disputes or challenging decisions are to be resolved, and when the relationship is no longer salvageable, how the parties can part ways. Without these agreements in place, nothing is pre-determined, nothing is fixed, and everything is up in the air. This typically leads to bitter and sometimes protracted litigation, eating up company profits and any good will that may have been felt by parties who were once friends. The agreement should be reviewed periodically, to determine if conditions have changed and the agreement needs to change.
Comments: Is there anything you could add to Partnering to find a Co-Founder?