Picking a business partner is like deciding on a college roommate. How well do you get along? How well do you actually know your potential partner?
Do you know what skills and experience they’re bringing to the table? (No skills involved in being a roommate except for cleaning.)
How open and honest is your communication? Do you foresee any issues arising during your partnership in the upcoming years?
If you can’t decisively answer these questions or you have an inkling of doubt in your mind, it’s probably a better bet to step back for a minute and reanalyze your options.
A common reason businesses go belly up is because of toxic partnerships. In fact, “65 percent of high-potential startups fail as a result of conflict among co-founders.”
So, how can you make sure you aren’t getting into bed with a partner who will lead to the start-up’s demise?
Below are a few red flags you should keep your eye out for.
1. They have ulterior motives
The truth is that everyone has a personal agenda, so don’t take it personally. Everyone is working towards personal goals, but that doesn’t mean they look to subvert everyone else. However, it would be prudent to keep this in mind when choosing a business partner.
You should be aware of what other ventures prospects are involved in, and what a partnership between the two of you would mean for them. What exactly are they looking to get out of it?
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That said, one of the worst possible things that could happen to your startup is to have your partner leave after just a short period of time.
If you plan to divide ownership equally, your partner could just up and walk out on you with half of your company. Thus, to prevent the above situation from happening, the two of you must devise vesting restrictions.
If you receive pushback from you partner regarding the matter, which should immediately raise a red flag.
2. They don’t treat employees and colleagues well
It’s embarrassing to have a partner who blatantly disregards others. Not only that, but to put it bluntly, it’s bad for business. If your partner doesn’t respect your other employees, it will spell misery for the latter and put a cloud over the entire office.
The last thing you want is to worry about when getting a startup going is turnover rates. It’s doubtful any employee would feel comfortable approaching their boss about their other boss, so one can expect sudden resignations along with a dismissive business partner – neither of which any business owner wants in the end.
It’s important to maintain constructive criticism and be an assertive leader; however, a partner who abuses their role and creates an uncomfortable environment for employees is not someone you want to keep around.
3. You see too much of yourself in them
As in most other relationships, both platonic and romantic, opposites do tend to attract. If you and your partner have the same skillset, the same expertise, the same opinions, the same – then you.
If fact, you’ll probably end up butting heads constantly since both of you have the same ideals, but potentially different methodologies. You want someone who can claim different areas of expertise and reliably utilize those skills.
You want someone who will challenge your ideas and put them through the ringer. A good business dynamic includes differing opinions, and if you share too many, you won’t be able to evolve.
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4. They want all the perks without the work
You cannot share equal partnership but not thusly divide the work. Yes, there will exist periods where one will have a larger workload than the other; however, this is because theoretically each will be focusing on different aspects of the business.
In other words, as the business itself fluxes, so will each partner’s respective workloads. The workload may not always be the same at a given time, but the overall amount of work put forward should be one-to-one.
If your business partner arrives at 8 AM and leaves at 4 PM on the dot everyday while you stay in the workplace for 12 hours straight, that’s not a partnership.
Responsibilities should be outlined right from the start, and both partners need to monitor the other to ensure equal contribution to the business on both ends.
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5. You wouldn’t want to hang out with them outside of the office
Perhaps one of the easiest tests of all: would you want to spend time with your business partner outside of the workplace? If the answer is no, then you’ve got a big issue to address.
Ideally, your business partner should also be a friend – someone you can confide in, seek help from, and is supportive should you experience extenuating circumstances that may temporarily take you away from the business.
If you can’t picture yourself vacationing or even going to happy hour with your business partner, you two have no friendship and thus probably have just as poor of a professional relationship. Owning a business, especially a startup, is a commitment: it entails hard work with long hours and disappointment and frustration.
You will oftentimes spend more time in the workplace with your business partner than you will with your own family. So, with that in mind, you better make sure that you’re making the right decision.
A business partner can either make or utterly break your startup. Although choosing a business partner can be a frustrating and drawn-out process, it’s important to invest the time and energy to make sure you make the best choice.
Unfortunately, you must always prepare for the worst. Partnerships that sour and the ensuing steps you should take to handle the situation is a whole different issue.