Choosing a business partner: Red flags and warning signs

On Behalf of | Jan 6, 2022 | Business Formation |

If you decide to start a business with a partner, it is absolutely crucial that you find the right person. Don’t assume that a friend or a family member, or someone you’ve worked with previously, is the right partner. They may not be, and your business is not going to be nearly as successful as it could be if you have the wrong partner on your team.

So how do you know if you’re considering someone who is actually not a good fit? It does pay to trust your gut, and you want to listen to your instincts whenever possible. Beyond that, here are a few common warning signs to look out for.

They expect you to do most of the work

If your partner looks like they’re interested in taking home 50% of the revenue, but you can tell that they’re only putting in about 30% of the work, you’re in for some future issues. It may work right now if you have the time and ability to take up the slack, but what about when the business grows? You need to have a fair and just working relationship.

All of your skills seem to overlap

It may be tempting to work with someone who is similar to you, and this can help in some ways. But you want to be wary about picking someone with the same skills. For instance, if both of you have great people skills but you’re both not very good at the financial side, your business could run into serious financial problems even when it seems like things are going well. What you want to look for is a business partner who brings new skills to the company that you wouldn’t have without them.

They don’t have the same vision or level of dedication

It’s problematic if your business partner looks at this as sort of a side job or a part-time gig that they can do when they want, while you look at it as something that you want to make a career out of. It’s also problematic if you have a very specific vision that is different from theirs, such as wanting to grow your company into an international entity while they just want to run a local business. You need to talk up front make sure you’re on the same page.

Steps to take to open your business

Once you find the right business partner, make sure you know exactly how to create a legal partnership agreement and the other steps you need to take to start your company.