When you’re starting a business, it’s important to choose the right business partners. After all, your business is only as strong as the team you’ve assembled. In fact, according to Forbes, startups that are mentored tend to grow over three times faster and raise seven times more money than those who venture alone.
But how do you choose the right partners? Here are four steps you should follow.
1. Research prospects’ backgrounds.
You wouldn’t marry someone without getting to know them first, would you? The same goes for business partnerships. Get to know your potential partners inside and out before making any commitments. This means doing a deep dive into their professional backgrounds as well as their personal lives. Try to get a sense of what they’re really like to work with.
When researching a business partner, it’s important to look into their professional and personal backgrounds. You can find this information on online databases that offer lists of the most admired CEOs. This can help you understand their leadership qualities and decide if they would fit your business well. Another great resource is social media. You can often find insights into someone’s personality by looking at their social media profiles. This can help you determine if they would be a good team player.
2. Align values.
This step is critical and often overlooked. Make sure you and your potential business partners share the same core values. This will make it much easier to work together towards common goals.
Here are a few questions to ask yourself to determine if you’re compatible with your potential partner:
Do you share the same vision?
When starting a business, it’s important to have a clear vision and be on the same page as your partners. If you don’t share the same vision, there’s a good chance you won’t be able to agree on critical business decisions. This can lead to tension and conflict within the company.
Do you have the same work style?
It’s important to be aware of your potential partner’s work style before entering a partnership. For example, you’ll likely clash if you’re a micromanager, and they’re a laissez-faire type of person. On the other hand, if you’re both laid back and like to take things one step at a time, you’ll be compatible.
Do you share the same values?
As mentioned earlier, business partners need to share the same core values. This will make it easier to work together towards common goals. If your values differ greatly, there will likely be conflict.
Are you comfortable with their personal life?
This may seem like an odd question, but it’s actually quite important. You’ll spend a lot of time with this person, so you must be comfortable with their personal life. For example, if they have a messy personal life, it can cause tension in the office.
Bottom line: Do your research and ask these tough questions before entering any business partnerships. It could save you a lot of headaches down the road.
3. Define roles and expectations.
Before entering into a partnership, it’s important to define everyone’s roles and expectations. What are you each responsible for? What are your goals? What are the deadlines? By setting clear expectations from the beginning, you can avoid misunderstandings and conflicts down the road.
One of the most common roles in a business partnership is that of the CEO. The CEO is typically responsible for making critical decisions and steering the company in the right direction. They also play a key role in networking and building relationships with clients and partners.
Another common role is that of the CFO (chief financial officer). The CFO manages the company’s finances, including budgeting, cash flow, and investment decisions. They also work closely with accountants to ensure that the company complies with financial regulations.
On the other hand, the COO (chief operating officer) is responsible for overseeing all the company’s day-to-day operations. This includes managing employees, developing processes and procedures, and ensuring that projects are completed on time and within budget.
It’s important to note that these are just a few of the many roles that business partners can play. There is no one-size-fits-all approach, so it’s important to tailor the roles to your specific business needs.
4. Draw up legal documents.
Once you’ve defined everyone’s roles and expectations, it’s important to put them in writing. This will help protect both you and your partners in the event of a disagreement. It will also help ensure everyone is on the same page regarding roles and responsibilities.
There are a few different ways to legalize a business partnership. The most common approach is to create a partnership agreement. This document will outline the terms of the partnership, including how profits and losses will be divided, how decisions will be made, and who is responsible for what.
Another option is to create a shareholders’ agreement. This document will outline the rights and responsibilities of each shareholder, including voting rights, dividend payments, and the ability to sell shares. You can also use an informal contract if you’re not interested in creating a formal agreement. This document will simply state the terms of the partnership and can be signed by all partners.
Whichever option you choose, you must have a legal agreement in place before moving forward with the partnership.
Choosing the right business partner is essential for any startup business owner. By taking the time to research and ask the right questions, you can ensure that you find a partner who is compatible with your business goals and values. Additionally, define roles and expectations early on, and put everything in writing to avoid misunderstandings down the road. Following these simple tips can set your business up for success from the start.