It can be hard to get a business up and running, particularly in the current climate, but it can be even harder to keep it going – around 80 percent of businesses go under in the first year – so it is not surprising that more and more entrepreneurs are thinking about getting into bed with other entrepreneurs (so to speak) and becoming partners.
This can be an excellent way to bring more money, ideas and expertise into the company and hopefully make it more successful, but it is certainly not something you should do lightly, so if you’re thinking about getting a business partner, here are a few things you need to do first:
Do a Test Run
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This might sound a bit unusual, and not all potential partners would be up for it, but if you can possibly do a test run, potentially by giving them a job or allowing them to make a small investment for 12 months or so to see how things go, do it. You’ll get to see if the whole partnership thing is going to work out without having to commit too thoroughly to the idea and seeing it through.
Run a Background Check
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If you’re going to let someone into your business life and have their name associated with your company, then it would be pretty stupid not to, at the very least, run an online background check on them, so that you can dig up any skeletons they have and ensure that they are financially sound enough that you wouldn’t have to worry about the financial side of things. Anyone who’s serious about being part of your business and who is an entrepreneur themself will understand this and you shouldn’t have any resistance – if you do that could be enough for you to question going into partnership in itself.
Ask if They Match Your Brand Values
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You might really like someone as a person, but you need to ask yourself if they typify your brand identity and everything it stands for. If they do not, then no matter how much money they’re willing to give you or how much you want to partner with them, you will have to ask yourself whether they’re a good match or not.
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If they don’t match your brand values, then having them as a silent partner could work depending on your brand, but if they’re very vocal in certain circles that could affect your company and it gets out that they’re involved with you, it could be pretty detrimental, to say the least.
What is Their Home Life Like
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Ordinarily, the home life of another person you’re acquainted with would not be any of your business, but if you’re planning to make them your partner, then you do need to know how well they’re functioning in life in general – not just at the office – because, as I’m sure you’ll know, how life can and does spill into work life and if you don’t want any drama or a partner who’s rarely around, you need to know the score.
Create a Binding Agreement
You might trust your soon-to-be new partner completely, and you might think that the agreement you’ve come to will be mutually beneficial, but that might not actually be the case.
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That’s why you should have a legal professional help you to draw up a binding partnership agreement that will protect your company and both of you from any potential liability issues and lawsuits in the future.
Work Out Your Roles Immediately
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Okay, so you might think that you have more important things to think about such as background checks., paperwork and actually growing your business, but if you’re going ing into partnership with someone, one of the first things you absolutely do need to do is to work out what roles you will each take, Why do you need to do this: So that you can work out how the profits will be split. So many partners have fallen out after initially agreeing on a 50-50 split (which seems pretty simple at the start) only for one of them to end up doing much more work or taking on a much bigger role and feeling like they are undervalued as a result. If you know what’s what from the off, you can split the profits accordingly and avoid and squabbles further down the line.
Check their Skills
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By far, most entrepreneurs choose to form partnerships with friends or colleagues, but this is not always the best way to go about things. If you want your partnership to be as successful as it can possibly be, you should look for a partner who has skills that are relevant to your business and who’s own knowledge complements your own, This may well be a friend or colleague, but it might not so take the time to choose wisely.
Create an Exit Strategy
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So many new entrepreneurs think that, if they go into partnership with someone they’ll have to remain partners in some capacity forever. Of course, this is not the cade, and any one partner can leave/ be gotten rid of at any time PROVIDING an exit strategy is drawn into any contracts at the beginning.
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You might be more concerned about looking ahead to a future where you’re working hard together to build up something brilliant, but you do also need to look forward to a time where one or both of you don’t want to do it anymore and create an exit strategy that works for you both.
Choose a Boss
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If you’re partners, you might think that you’re both bosses and in the very literal sense you are, but most businesses are best run when there’s one person at the top who is responsible for the day to day direction of the business. So, when you’re thinking of getting into a partnership, be sure to talk over with your partner who will be in charge of the day to day, what their duties will be and how the other party will be consulted.
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If you do this stuff, there are no guarantees, but it’s highly likely that you will enter into a partnership that is both fruitful and fulfilling.