Building a business is a thrilling experience. Others might say it’s the most stressful thing they’ve ever done. Often, however, people are jazzed about the business ideas they have and are willing to overcome the stress and disorganization to build something of value in the world. But then, fear sets in and all of a sudden, these people feel like they can’t pursue their ideas on their own.
Whether it’s money, timing, resources, or support that holds them back, the idea of bringing on a business partner tends to cross the mind of every would-be-entrepreneur at some point or another. Before you rush into a partnership that is going to change the course of your business forever, be sure to ask yourself these five questions.
You can always change your mind in the future to bring someone on, but once your create a partnership, it’s hard to undue. Take a good amount of time to weigh your options before committing to this kind of business relationship.
Question 1: What’s best for the business?
There’s a reason why people refer to their businesses as their babies: it’s a thing you create in the world and it means a lot to you. It is the culmination of all your ideas, thoughts, actions, efforts, failures, and even despair. It’s got all your blood, sweat, and tears in it – sometimes, literally. So of course you want to protect your business and do what is best for it.
It’s helpful to think of your business as a separate entity from you, even if you are not incorporated, because you can make objective judgements and decisions from that place. When you see your business as an extension of you – your baby – that is more difficult to place. If you were put in charge of the business, instead of being the one who created it, what would you advise the owner to do? Would partnership be the best thing for the company now as well as later? Removing the emotion from the equation helps you to make objective decisions that will ensure your business is moving forward in a meaningful way.
Question 2: Am I only doing this for money?
Sometimes partnership agreements come about because the original owner or company founder doesn’t have enough money to actually bring their ideas to life, or money has run out and something needs to be done in order to carry on operating. It’s a tough spot to be in, but it’s also a prime example of how businesses land in the laps of other people. When we are stressed about money and can’t see a way out, we look to others to bail us out.
Even if we are able to get a loan for our business, the stress of partnership woes can tank a company. A business partnership formed under this kind of duress means that you will always give away the upper hand. If you are on the receiving end of the money or investment, you’ll be indebted to the partner or investor. They might not take all of your company, but they can ask for enough of it to change the conversation into one of “who is in charge here anyway?” You might find yourself answering to a boss-figure even though your door has the title, CEO on it.
Question 3: What am I afraid of?
Another situation that business owners often find themselves in is fear-based decision-making. If you’ve ever thought of starting a business you know how this feels: you have an awesome idea, but you worry about what other people think. But if Sally would start the business with you, you’d have someone to lean on during the hard times.
It’s a totally valid point and definitly the reason a lot of people form partnerships from the start: entrepreneurship is really hard and it’s wise to surround yourself with people who get it. You need to ask yourself if you are looking for a partner to quell the fear inside you or because Sally actually has valuable skills and knowledge that would move your business operation in the right direction? It’s a tough call.
Question 4: What’s the cost of developing a partnership?
We’re not talking about money here. The cost of developing a partnership goes beyond money. Sure, having a partner means you will have someone to be accountable to, which might help you do more and show up when you don’t really feel like it, but it can also mean that you have to live up to someone else’s expectations and answer them in a way that leaves you feeling like you’re an employee.
There are endless horror stories of people who started or expanded a business together, only to find that they couldn’t work together. Friendships fall apart. Family members break ties. Neighbors fight. Siblings want to strangle each other. Business can break you. Don’t let it break the relationships that mean the most to you, too.
Question 5: How does this move help me?
While your first question should be about how the partnership will help the business, you should also include questions about what you get out of the partnership. Does this partnership cause you to have to do more or less work? Does it mean you have more time or less time? Will you need to train or orient this person or are they already onboard and ready to go? Do you need to pay for support staff for them and their role? Does it help you achieve your financial goals, separate from the company? Does it help you expand your services and understanding of the industry?
Regardless of the industry in which you work, partnerships can generally strengthen the offering and positioning of your company, especially if you want to get investment down the road. Ask yourself these five questions before bringing on a partner to help you see what’s really important to you and your business.