Adding a business partner, or partners, to your company is a great way to combine diverse skills, talents and experience in order to form an efficient and successful business. If you’re thinking about getting into business with someone, here’s 7 questions to consider.
- Will You Put it in Writing?
Every agreement and decision should be put in writing. Putting it in writing protects you and your business from any legal disputes. Attorneys suggest drafting a written agreement that at least covers the following:
name of the partnership,
each person’s contributions,
allocation of profits,
loss and draws,
clear definition of each partners role, authority and decision-making ability,
dispute resolutions and
process for adding new partnerships.
- What’s Your Vision for the Company?
You’re going to be spending a lot of time with this person and investing a lot of money in a joint venture, it’s important that you both agree on what the business’ goals, morals, values and future would like. Consider sitting down and writing a vision statement together for the business to better evaluate where you both stand when it comes to the future of the company.
- What are Your Strengths and Weaknesses?
It’s not always about the money, business partners should complement each other. Skills and experiences should be paired to provide optimal efficiency and weaknesses should be planned for and covered. Much of growing a business is awareness.
- How Much Time Will You Contribute?
It takes more than money to start, maintain and grow a business. It requires long hours, sleepless nights, weekend hours and even holiday grit. If the time equity is not equal or as agreed upon, it will cause problems and disrupt the business.
- How Much Money Will You Contribute?
Not all business partnerships start with equal capital and many determine ownership equity by the percentage amount of capital invested.
- How Do You View and Solve Problems?
Businesses are full of complications and it’s important to be sure of who you’re working with. If you haven’t known them long enough, ask previous partners and businesses. Someone who overreacts or reacts too soon or too harshly can easily cost the company millions of dollars. You should strive to work with someone who has experience in running a business even if you don’t.
- What are Your Thoughts on ‘Exit Strategy’?
Some businesses end and some people decide to leave. Either way, it’s important to have a plan for the business and for partners who decide to leave.
When choosing business partners, it’s important to make a sound business decision. This decision will impact your business and company, financially and legally, for as long as it exists. For more tips on how to successfully choose business partners for your company, contact Growth Capital Team today.