Bringing in a business partner is one of the most challenging things that can be encountered. There are many reasons for adding a partner to a business and many of them are the wrong reasons. For example:
- Liking someone when you meet them
- Hoping that the person can help save your business
- Tired of being alone in the decision making process
Yes, there are many others that can be added to the list, and making a hasty decision without the proper reasoning usually results in a failed partnership.
Expanding a business by the addition of a partner can be a good move, but there has to be a slow and defined process by which such a partnership is made. The following is a brief outline that I use when a client brings up the subject:
- Why do you need a partner?
- What would happen if you did not bring on a partner?
- How long have you known this potential new partner?
- What are the strengths that he brings to the new firm?
- What do you know about his current business?
- What has he accomplished in the past?
- What do you know about his family?
- What are your expectations of the new partner?
- What would the new business structure look like?
- How would the management responsibilities be divided?
- How will the financial aspects be worked out?
- Do you have an attorney to draw up an agreement?
There is a lot more to this process, both from an internal and external viewpoint. I compare a future partnership to a marriage;
- First part is getting to know each other
- The next step is the dating process
- Going steady is another step forward
- After a time and engagement takes place
- And then the marriage.
A business partnership is seldom successful if it is done on an impulse. Take the time necessary to learn each other’s strengths and weaknesses and management styles. Do some joint planning by preparing both a business plan and a marketing plan. This process will allow each person to better understand the other and also to learn about each other’s commitment.
I have seen some very successful business mergers and am in favor of this type of growth. My only caveat is to have a well prepared process before the final marriage vows are exchanged.
Obstacles are the frightful things you see when you take your eyes off your goal. Henry Ford