What do McDonald's, HP, Apple, Google and RotaCloud have in common?
(Aside from being wildly successful!)
They were all founded by business partners.
Deciding to start a business with a friend, colleague, or business acquaintance is a huge commitment to make. Business partnerships are often compared with marriages, and it's easy to see why - both arrangements require a great deal of trust, respect and shared values!
If you're setting out on an entrepreneurial journey, you may well be considering asking someone to join you before you start out. Working alongside a business partner can be hugely effective, but it's not without its challenges.
Why work with a business partner?
There are numerous benefits of working with one or more business partners:
- Access to skills. You'll immediately be able to draw on the skills of your business partner. You might have the technical know-how, but you don't have the people skills you need to launch a product. Your business partner's experience in sales and marketing means your weakness is irrelevant.
- Ideas and feedback. It's easy to get carried away with an entrepreneurial idea without seeking feedback on fine details or the entire business plan. A business partner will not only provide you with plenty of feedback, they'll also be a valuable source of ideas.
- Experience. Your business partner can make up for your lack of experience, whether it's as an entrepreneur, launching a product, or operating in a particular market or region. They'll help you avoid any costly errors.
- Funds. Depending on your partnership arrangement, your partner may be contributing significant additional funds to the business.
- Network. Cash isn't the only useful resource your partner might have - their professional network can also be incredibly valuable to your business venture.
- Morale. Running a business solo isn't much fun - working alongside someone else can certainly raise morale.
Think about the current problems you're having with your business idea - would a business partner help you resolve them?
It's not all good news.
There are some massive challenges involved in working with a business partner, and it's vital that you consider them before signing away half of your business. Aside from the issues associated with finding and choosing a business partner, you need to contend with plenty of other problems.
These usually only arise when things start to go wrong.
You'll start to disagree more often. You'll start to doubt each other. One of you might consider bailing altogether.
Only at this point, when your partnership is tested to its limits, will you learn how strong it really is.
Strangely enough, you may face similar problems if your business partnership is a storming success.
Perhaps another company will offer to buy your business, or maybe your partner will want to take a larger salary, even if you don't think it's wise.
If you'd like to continue your search for a business partner despite these problems, here's where you should start your search.
How to Find a Business Partner
There are two approaches here:
- Using your established connections
- Actively seeking to expand your network to find a business partner
Each route has its benefits and drawbacks, and you might find that you've no choice but to take the latter approach.
Using your established connections
Most entrepreneurs start their search for a business partner by drawing on their existing personal and professional relationships in their search for a potential business partner.
Simply asking friends, family, and former colleagues if they'd consider starting a business with you is a good place to begin your search. You can also ask your contacts if anyone in their networks might be interested.
Make sure you communicate what you're looking for from a potential business partner, particularly the kind of commitment you expect.
Take your search a step further by reaching out to your online network. As well as LinkedIn, reach out to your alumni association (if you have one), and any other business groups you're an active member of.
Prepare a list of questions you'd want to ask any potential business partners - we'll look at this in more detail later in the article.
Expanding your network
Run a quick Google search for business events near you. You'll find loads of results, particularly if you're near a large city. Join local groups and attend events, even if they're not specifically for finding business partners.
You could also join national organisations like the Federation of Small Business, or your local Chamber of Commerce. Check out Meetups.com for even more events.
Another option is to look through forums such as those on Startups.co.uk to find potential partners.
If you're chiefly focused on seeking investment, try out sites like the Angel Investment Network to start your search.
How to Choose the Right Business Partner
Even if your search hasn't been as fruitful as you'd hoped, it's crucial that you thoroughly assess potential business partners before giving them the green light.
With so much at stake, there's really no excuse for rushing this stage.
And there's plenty to consider.
Here's what you should aim for.
Skills and competency
- Differing skills. There's not much point working with a business partner if they don't bring a different skill set with them. Choose a business partner with skills that supplement your own.
- Mutual respect. If you don't respect your business partner as a person and as a competent professional in their field, your partnership won't last long.
- Strong communication skills. Communication is the single most important skill you need a business partner to have. If you can't trust them to communicate honestly and openly with you, particularly during a crisis, your venture will struggle.
- Impressive track record. Have their entrepreneurial efforts been successful in the past? How about their career as a whole? A solid track record is a good sign that they'll be able to repeat their success.
- Network. A strong network suggests that a potential partner has some influence within their industry, whilst also giving you a potential source of business. Alternatively, a promising client list also points to competency - and plenty of business for you.
- Willingness to sign an agreement. Your partner's approach to formalising your arrangement will tell you a lot about how seriously they're taking your business venture. If they're keen to sign a partnership agreement and pay close attention to the terms, it bodes well for your partnership's long term success.
- Their questions for you. Ideally, your potential partners will ask you similar questions to those you ask them. If they're uninterested in the details, they're unlikely to be fully invested in your business in the long run.
- Understand that disagreements will occur. Your partner might be an optimist, but they must be realistic about the potential problems that could occur later in the partnership. If they dismiss your concerns, be cautious about proceeding.
- Willingness to discuss exit & contingency plans. Similarly, if they're open to discussing what might happen if someone offers to buy the business, if the business fails, or any number of other hypothetical but realistic scenarios, it's a sure sign your potential partner is taking this venture seriously.
- A test run. If you haven't worked alongside your potential business partner in the past, suggest a test run where they come and work on your business for a couple of weeks. This'll help you figure out if the fit is right.
Personality and Values
- You get on. Even if your potential business partner is a wildly successful entrepreneur with the drive (and the funds) to bring your business plan to fruition, if you don't get on, your partnership won't work.
- Trustworthy. You need to be able to trust not just in the quality of your partner's work, but also trust them on a personal level.
- Honest. It's vital that your business partner is always 100% honest with you so that you can work together to resolve problems and capitalise on opportunities.
- Dedicated. Once the excitement of starting a business together wears thin, you need to be able to count on your business partner to remain committed to the business. If your potential partner tends to lose interest in projects quickly, is there any reason to suggest the outcome will be different for your joint business venture?
- The same values. Although you'll have different skills, you must have similar values and motivations, particularly when it comes to your business. This'll help you avoid disputes when dealing with ethical issues and firing and hiring decisions.
- The same business goals. There's little point going into business together if you don't have the same objectives. If your partner wants to make a quick buck, but you'd rather build the business for the long haul, you'll disagree on many business decisions. Make sure you're on the same page.
- Stable personal life. You need your business to be your partner's first priority. If they're caring for an elderly parent or going through a difficult divorce, they (quite rightly) won't put your business first. Depending on your business arrangement, it might also be worth finding out if their close family are supportive of the arrangement before proceeding.
- Financial situation. You don't want to go into business with someone who has vast amounts of debt. Don't be afraid to do some research and thoroughly vet your potential business partners before committing to building a business together.
Making the leap
If you've found a business partner (or partners) that fit the bill, the next step is to go ahead and form your organisation and sign a partnership agreement - with the help of an accountant and a solicitor. In the UK, there are several types of partnership to consider, as well as forming a limited company - check the Gov.uk website for all the details.
And if your chosen business partner happens to be a close friend, there's more to think about before you go into business together.
Forming a partnership is just the beginning of your business journey. Find out how to scale obstacles and overcome challenges to set your business on the road to success.