Choosing the right business partner for your small business is critical to its success. After all, this is the person you’ll be entrusting your financial livelihood to, not to mention spending most of your time with. A small business is a long-term commitment, so it takes careful consideration.
But how do you know who’s right and who’s not? Ask yourself if you know these five things about your potential business partner before you sign on the dotted line.
1. Are they trustworthy?
Depending on how your small business is structured, you could be liable any, or all, of the debts accrued by the company. The smaller the business, the more likely it is your personal assets are at risk. So if you wouldn’t trust your partner with your own credit card, then chances are you shouldn’t go into business with them.
2. Are they financially stable?
You need to be able to trust your business partner to conduct themselves with integrity. You also need to think they’ll be a suitable steward of the company’s assets. Look for someone who is financially stable with no history of bankruptcy, bad debts, poor credit, or other financial problems.
3. Do you share the same vision and drive?
Before you take the plunge, sit down with your potential business partner and ask them about their long-term goals and vision for the partnership. Where do they see the company in five to 10 years? What are they willing to do, or sacrifice, to make that happen?
If your prospective partner wants an easy life and weekends off, but you have grand plans to scale growth and a determination to work 14-hour days to get there, you’re looking at a recipe for resentment.
4. Do you have complementary skills?
One of the challenges of running a business is the need to be all things to all people, from providing vision and leadership to keeping the books up to date. Try to look for a partner whose skills complement rather than mirror your own.
If you’re a big-picture thinker, look for someone with an eye for detail. If you have a head for numbers, partner with someone who has great interpersonal skills. The more skills you have between you, the stronger the foundation for building the business.
5. Can you trial the partnership?
A trial period is a great way to test-run your new business partnership. Try taking on a side project together to see whether your skills and work drive are compatible. Or write your business plan together – this is a sure-fire way to learn if you share the same vision. You could even do some volunteer work together to see how your potential partner tackles a project when there’s no vested financial interest.
Starting a small business is an exciting time for most people. With our guide on how to choose the right business partner, the honeymoon need never end.
Need more information? Read our 10-step checklist on how to start a small business. And make sure you start on the right financial foot with QuickBooks Online for small business.