Maybe you have had a bad partnership before, who screwed you over or perhaps you even heard stories of partnerships that have gone totally wrong. Trust me, I have had my fair share of partnership experiences. I have had business partnerships that have lasted 1 year and others going on 10 years strong. So, after working in multiple startups, I’ve come to value what the right partner or co-founder brings to the table. Even if you’ve been in business for several years, bringing on a partner can help you scale up or shift to the next order of magnitude.
It’s tricky to effectively manage everything on your own. Along with dividing and conquering the workload, problem-solving from different perspectives is one of the most valuable contributions a business partner can make. And you can be sure there will be many problems down the road.
Two minds are better than one! Here are my 4 tips for finding the right partner:
1. Find someone with a complementary skill set to your own
You don’t need another you, no matter how good you are. Friends often dream of creating and building the next big business together. That’s fun in the beginning, but it often doesn’t work since the two of you probably have similar skill sets.
It’s important to think about your strengths and weaknesses and what the demands of your role are going to be. For example, you may be great at building relationships and closing deals but horrible at operations and technology. The idea of managing processes, procedures and a team of developers may make you want to run for the hills. And, even if you didn’t run, you’d probably suck at it if you were “forced” to do it.
In a startup, you need to be well versed in all aspects of your business. But to be effective, you need to also focus. If you’re trying to manage all of this on your own, you will never grow. So, if you’re a business development person like me, find a partner with the skill set to manage the operations or technology of your business.
2. Clearly define roles and responsibilities
Your partner shows up to work, now what? Don’t assume the partner is on the same page as you. Make sure you each have defined roles and responsibilities, which will help you understand the expected deliverables.
Consider the following:
- Determine overall business objectives as well as specific objectives for the next 12 months.
- Set down each partner’s core responsibilities for achieving those objectives.
- Establish benchmarks for measuring success for each partner.
- Make sure you and your partners agree to this.
3. Get it in writing!
Spell out your roles and responsibilities in a partnership agreement. While, there are some standard agreements online, it’s probably best to have a business attorney draft one for you once you’ve decided on the key terms.
You need to determine what you want to give in exchange for a partnership that works for both of you. This includes compensation, equity stake, or more likely, a combination of the two.
Often at times we may forget to set out the professional partnership, especially with friends, this can be an afterthought. Partners don’t think about these crucial factors until money is at stake and by then it is too late. Address these issues of compensation and equity at the beginning. It only gets more uncomfortable as time goes by.
The Big Question:
How much compensation or equity should a partner get?
That depends upon three factors:
- Where the business is in the life cycle (idea, seed, growth).
- How much time and money the partner will commit to the business.
- What key relationships or industry expertise the partner will bring to the business.
How much compensation should each partner get?
4. Find someone you genuinely enjoy, like, and trust.
There is a trust continuum. Mistrust is very difficult to overcome and can doom a partnership. True trust builds over time. So a sense of increasing trust means you are on the right path.
Find someone who wants to grow and will support your growth. From birth to death, each of us is consistently moving through a process of change. Sometimes, we are not aware of the changes we’re experiencing. And, sometimes change is viewed as a threat to the status quo. Successful partners embrace change and growth, knowing that this attitude benefits them both individually and as a team.
Having the right partners allows you to create results that would otherwise be unobtainable. Using these 4 strategies to select your next business partner, will increase your potential for creating true synergy through a partnership that is greater than the sum of its parts. Enjoy the rewards!