Selecting a business partner is one of the most crucial decisions that you can make, so think seriously before you make a call.
Unless you have the kind of deep pockets needed to hire staff from day one, you will struggle to get a business going on your own. You’ll have gaps in your skill-set, and there’s usually too much work for one person to do well. That’s why most people with a strong business idea look for a potential partner.
It goes without saying that a good partnership will sustain a business through tough times, while a bad one will fold under pressure. At DCA, we’ve advised many businesses from their earliest stages, including the formation of a partnership . We’re often asked about the essential ingredients for a successful partnership, so have decided to share our own advice.
Unsurprisingly, an effective working relationship is crucial to success. If you can’t work long hours with somebody, trusting them to do their bit effectively, you shouldn’t be in business with them.
This doesn’t mean that you need to be best buddies. Though it helps to actually like somebody, it’s more important to have worked with them on a day-to-day basis and know that you’re an effective pairing. If you haven’t already had the benefit of this experience with a prospective partner, you should work together for a time – possibly sketching out your business plan with a proper NDA in place – before making any further legal commitment to each other. That way, you’ll have some idea of your professional dynamic.
One potential mistake when choosing a former colleague, of course, is selecting somebody who’s just like you. If you do this, you’re missing a major opportunity to broaden the skill-set of the core management team.
If, for example, you’re an excellent programmer but have never made a sale in your life, your company will benefit more from a salesman who understands the product or service than it will from another ace technical person. However tempting it may be to work with a carbon copy of yourself, look for a partner with skills that complement your own.
When a business isn’t panning out as planned, or a person’s life plans change, the relationship between partners can get messy. This is especially true if there isn’t an agreement in place to cover these eventualities.
Every business should have legal agreements between the partners setting out more than just the ownership of the company and its assets – you should provide for exiting the business , what happens if a partner gets incapacitated, and how you will divide things up if you decide to wind down. No company follows the road set out in its business plan to the letter, so provide for the bumps and twists in the path with mutually acceptable, legally enforceable agreements.
Selecting a business partner is more art than science and, if your gut instinct tells you that a partnership won’t be effective, you’re probably right. But making sure that you and your partner have these essential ingredients should give you every chance for a successful working relationship.
Eamonn Garvey and Declan Dolan