Know YourselfThe entrepreneur must clearly know him or herself in order to select the ideal business partner. The ideal business partner is one who compliments your strengths and weaknesses. By knowing yourself I mean really understanding what makes you tick at a much deeper level than knowing your favorite color. If you are by nature an introvert and you partner with another introvert, that could really spell trouble. If you are more of a big idea person and you partner with another big idea person, more trouble still. Ideally you want someone who is very strong in an area you find lacking in yourself.
I highly recommend everyday entrepreneurs gain a deeper knowledge of themselves through personality testing along the lines of the Myers-Brigg Type Indicator MBTI . There are tons of free tests all over the internet. Just Google free mbti test.
Another great approach is to distill it down to your specific entrepreneurial type. There are different resources for this as well but one I find particularly interesting is EZOG or Entrepreneurial Zone Of Genius. You can take the test at the EZOG website here. I took this test and found the results to be quite interesting and really made me think about how I do things in my business. I have no affiliation with EZOG other than following them on Twitter.
Know Your Business
Why partner with a hot shot marketer if you have a strong marketing operation already? When considering a partner make a list of your business's weaknesses. This is separate from your personal weaknesses. Then, see how the potential partner fills those voids. Otherwise, you run the risk of becoming lopsided; really strong in one particular area, but extremely weak in another.
Check Their HistorySimply put, what has this person done in the past that makes them a good fit for partnership? Just as important, what have they done in the past that could potentially hurt your business?
You should require them to either have prior experience running a business or a unique skill set that adds a competitive advantage to your business. Perhaps you are a coder and you partner with someone with a proven track record in business development and marketing. Or perhaps the reverse is true.
Ask for a recent tax return and a credit report. If they hesitate, send them on their way. Taking on a partner with heavy financial or tax obligations could become a burden on the company in challenging economic times. Are they in a position to miss a paycheck if necessary? If not, you could wind up with a partner who decides to get a full time job "just until things get better". This could prove disastrous.
Skin in the GameRegardless of who the partner is or what unique skill they bring, if you add a partner to an established business, require them to make a financial investment. Sweat equity alone or a unique skill set will not cut it. Putting up cash tests just how committed they are. If they hesitate or refuse, send them on their way.
Get It In WritingWhether the partner is your best friend, your mother or someone you met at a networking event, get every detail in writing. Have your attorney draw up the agreement and go over everything in detail with both of you. This is the last chance for either party to back out or to clarify details. Be sure to find a lawyer who specializes in business partnerships and buy/sell agreements. Absolutely do not conduct any business together until both of you agree and sign the partner agreement.
There you have it. If all of this checks out and the person still wants to partner with you, I would say you made a good choice. For those who feel I missed some important details, please share your advice in the comments section. And don't forget to retweet this article!
Godspeed and I look forward to seeing you in The Players Lounge.