America is a nation built on entrepreneurship. Americans are encouraged to start their own businesses and strike out independently, and of course, there are some benefits to doing so. With that being said, it can be difficult to get a new business off the ground without the help of a business partner.
What can a business partner offer?
Business partners can fulfill many different roles for one another. Sometimes, business partners are creatively involved with one another, with both contributing equally to the running and conception of the business. Others will have the creative and practical aspects of the business fall to one partner, while the other is more involved financially. People find business partners organically or actively seek them over time. But either way, it’s understandable if you might want to begin a business with a partner rather than attempt to run it by yourself.
However, working with a business partner may be more difficult than you expected. In fact, a lot of business partnerships fail to come to fruition; or worse, they fall through after the business has been started, leaving one partner with the business or even both fighting over it. A business partnership failing can tank a new business entirely, or leave it crippled. It’s estimated that up to 70% of all business partnerships fail. And even though a business can recover from this event, it’s best if you at least have the idea that your business partnership may not work out, either so that you can avoid it entirely or so that you can move first.
Let’s look into some of the signs that a business partnership might fail.
Evasiveness
If you’re going to start a business partnership with someone, you need to be completely honest with them about where you stand professionally and what could affect the business. But you must expect the same of them in turn. If a business partner is being evasive about their finances or even their credit score, you need to consider whether or not they’ll keep other things regarding the businesses from you. For example, it’s estimated that one-third of all Americans have poor credit. No matter how common poor credit is, however, it can still affect your ability to take out a business loan and do a number of other things that are a necessary part of beginning a business. If your business partner is legally attached to the business, as they should be, their poor credit score could keep your plans from moving forward; and if they aren’t open about those details, among others, you need to reevaluate your business plans. Take to heart those vague answers and delays.
Inconsistencies
If it seems like your business partner is saying that they can move forward in September at one point and then suddenly push those plans back to November a week later, it could be that something unexpected occurred. Or it could be a warning sign that you need to take seriously. Look not only at how many inconsistencies are occurring, but how your business partner deals with change.
Inflexibility
Starting a business requires adaptability and a good bit of fearlessness. It’s not for the faint of heart, and if your business partner is unable to roll with the punches or is overly cautious due to fear, they may not be the right person to work with. Starting a new business is never a sure thing. Therefore, you need to work with someone who is ready to take the risks necessary. According to the McKinsey Global Institute, between 25% and 45% of all new products fail. If your business partner isn’t ready to take the chances necessary, they may not be right for you.
An Inability To Take Responsibility
Business partners need to take responsibility for their share of the business and the work. Whether that means taking responsibility for creative choices or tasks that need completing, or if that means taking responsibility for your financial commitments. When a person is avoiding responsibility, they need to reassess whether or not they’re ready to commit to the business entirely. And it’s your responsibility as a business partner to be upfront and ask your partner if they’re really ready to do the work that you’re willing to do.
Unequal Enthusiasm
It’s incredibly difficult to start a new business. Therefore, you need to be passionate about it, even if you’re more of a business partner on the financial end of things. That requires enthusiasm as well, and if you have more enthusiasm than your partner, they will probably struggle with commitment down the road and may even ultimately back out of the partnership unexpectedly. You need to protect yourself, and part of this means stepping away from your own enthusiasm and honestly assessing whether or not your partner is on the same wavelength.
There are so many issues that come up when you enter a business partnership. It can be deeply rewarding, but there is also a lot of risk involved. But if you’re forthright and assess the risks carefully, checking in with your partner often, you’ll be much safer in the long term.
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Karen E Kinnane says
When considering a business partner, you ought to look at how he / she and their parents earn a living. This may sound prejudiced but I want to partner with someone who has a successful entrepreneur parent, or someone in the private sector who grasps that the more you put into a project, the more you will get out of it. I would usually (always an occasional exception of course) never partner with a government worker or a teacher. That’s because people who work in these areas have never experienced earning more by working harder. They show up, do what they do and get exactly the same amount of money as a similar person who works super hard and is very productive or is a lazy slacker who doesn’t do their job. They also are never fired for not producing because of tenure or government rules. See the “rubber rooms” for bad quality teachers in the NYC school system who literally never get fired once they have tenure. There is no connection between increased production and increased income in these cultures. I want to partner with someone whose father ran a hot dog cart, a trucking company, a garment factory, a restaurant, a non union carpenter or electrician, had a fruit stand, sold antiques, painted houses, ran a tree service, was an auctioneer, repaired computers, owned a cleaning service, was a tailor or a seamstress, or had a bookkeeping business. These people make good partner material because in their mind increased production is linked to increased earnings. If your parent worked for himself / herself, business was discussed around the family dinner table and the children grew up knowing if you didn’t work you didn’t get money and that if you worked harder you earned more money. Now if you find a teacher whose father runs a lawn mowing and yard cleaning business and the teacher pitches in on weekends, vacations and all summer the teacher would be a good candidate. Or a government worker whose family ran a pet grooming shop might be a good candidate. I’d notice whether the government worker pitched in at the family business when things got hectic. I split a booth at an antiques show with a government worker for many years. I like him a lot and he knows his stuff. But I did the bulk of the selling for both of us because I could not stand to see a customer looking at one of my friend’s items and realize my friend was busy chatting up his friends and ignoring the customer. I’d approach the customer, close the deal and give my friend his money. It worked fine. I only needed half the booth so I only spent half the booth rent to display all I needed to display and my friend was happy because so much of his stuff sold effortlessly on his part. He used to joke that I could sell ice to Eskimos (I hope that isn’t politically correct, I’m only reporting what my friend said.) You want to look over your potential partner long and hard before you get tangled up in business. If you partner with a friend who doesn’t share your work ethic you will lose your business, your money and your friend.