Choosing the right business partner is the first critical decision that you will take as an entrepreneur. In fact, it’s as important as choosing who to marry and has just as many financial consequences. In the initial excitement of coming up with an idea, it’s easy to get carried away thinking about the millions you’re going to make and we forget to question whether or not our friend/family member/work colleague is just the right person to do this with.
I’ve made this mistake a number of times because I simply didn’t know how to assess if we were a good fit. And so, before you take the leap of faith, consider these 5 factors when deciding whether or not to start a business together.
- They bring skills to your business that you don’t have. There’s absolutely no point having two or three people with exactly the same skills. Rather look for people who can complement your strengths and weaknesses.
- They buy into your vision and are willing to invest the time, effort and money to bring that to life. Building a business is tough. You both have to be committed to do what it takes, because without that commitment, it’s so easy to find a reason to quit.
- They have skin in the game. All shareholders need to invest money into the venture. That way, you’re all taking a risk, which makes decision making that much easier. If a shareholder can’t contribute money at the start, then create a legal agreement where they pay for their shares over an agreed period of time and hold them to it.
- They’re able to make decisions even when the outcome is unclear. Starting a business means taking a giant leap of faith. And every decision you make after that involves risk. There are no guarantees that things are going to go exactly the way you planned. In fact, they rarely do. A partner who understands this and can help you navigate the risk is worth their weight in gold.
- They don’t run away from the hard stuff. In building your business, you’re going to encounter challenges every step of the way. You need someone who will face them with you and help you find solutions.
And lastly, ALWAYS, ALWAYS create a shareholder’s agreement. It protects both of you when things go wrong. I learnt the hard way; I hope you don’t have to.
Harsha is the founder of Lesedistyle