Freddie Achom: the questions you should ask a potential business partner
Before you dive into a business partnership, make sure you’ve asked all the right questions and got the right answers. It’s easy to get carried away with the idea and find yourself trapped in a situation that isn’t working.
You need to know as much as possible before you enter into any kind of formal agreement, including their background, financial circumstances and family life.
I’ve put together some questions to ask before you both sign on the dotted line:
- What do I need?
A business partner must bring something to the table that you don’t have. You’re looking for complementary experience and skills. For example, if you’re an ideas person, you might benefit from a detail orientated project manager type for a partner. Or, if you’re shy, you might prefer an outgoing ‘people person’ to take care of the sales side.
- How are their finances?
You must understand their financial status before committing. It can be difficult to ask questions about their spending habits or family situation, but financial circumstances will dictate their future actions. Look out for red flags, such as lots of debt or unrealistic projections.
- Can they dedicate the time?
Find out their understanding of the venture and expectations of the time they’ll need to commit. While partners don’t need to spend the same amount of time each, they must be on the same page in terms of expectations.
- Are they committed?
Your business partner’s commitment and enthusiasm must match yours, regardless of the type of business you’re launching. It’s common for partnerships to start enthusiastically, particularly when it’s two friends working together, but fall apart when the daily grind and long hours kick in.
- Will the business come first?
Find out whether they have commitments that may push the business down the scale of importance. If a potential partner is looking to start a family soon, or is taking care of a sick spouse, then they may be distracted. It’s important for families to be behind both partners to ensure it works.
- Can they deal with tough situations?
When problems arise – and they will inevitably do so – how would your potential partner react? Have a look at their past business ventures and analyse how they dealt with problems then. This will indicate how they will do so in future.
- Do they have questions for me?
If you’re interviewing for a traditional employee and they ask no questions when prompted, this can be a red flag. The same goes for a potential business partner. If they’re asking questions, then they’re unlikely to be committed for the long haul.
- Are they willing to put it in writing?
Don’t make the mistake of going on a handshake. This isn’t legally binding, although can seem friendlier. It’s vital to get everything on paper, including mutual expectations and what the consequences will be if they’re not met. Taking the step to make it legally binding can expose any potential problems within the partnership. If it’s in writing, then there’s no arguing about it should there be problems down the line. And if they don’t want to, then you should not go into business with them.
- Do I actually need a partner?
People often think they need to work with someone to make a business work. This is not necessarily the case, and if you can get help during your business set up without sacrificing any of your business, then that’s a better option. Start-ups are often cash poor and don’t have much money straight away. In these cases, partners can be the best option. But if you are in the position to employ someone then this is a better option than giving away a stake in your business.
- And if there are problems?
When starting out, most people don’t even consider there may be rough times ahead for their new business. Discussing what should happen if relations break down is very difficult to do early on, but it’s also very important. You can’t predict every possible problem you might face as a partnership, but you could work with a solicitor to put frameworks in place to deal with the most likely problems that could crop up.
Ask these questions, do your due diligence and take your time before signing up a partner, and you’ll be on your way to a productive working relationship for your new business.
Freddie Achom