Forming a business partnership is one of the keys to building a successful entrepreneurship. Two teams working together can often generate more productive results for both groups. Here are essential insights to consider before partnering with another business.
Why a business partnership requires research
You should know a potential partner’s business reputation and financial history before entering an agreement. You can be held liable for a business partner’s actions, especially if you collaborate on manufacturing, distribution or promotion.
Questions to ask when considering business partners
Here are some questions to ask about the capabilities and reliability of potential business partners:
- What are the owner’s qualifications? – Does the owner have expertise is their field or do they have limited knowledge? Another consideration is if they’re already part of a business network.
- Can the company continue to operate without its owner? – If the owner were to die or become disabled, there should be a successor in place.
- What are issues involved in partnering with a family business? – Find out which children of the owner, if any, plan to stay in the business. It’s also helpful to know if the owner has a life insurance policy that lists children as beneficiaries of the business.
- How does the owner plan to retire? – An owner with a clear retirement plan is usually more financially stable to work with.
Keys to working cohesively with partners
It’s important for each partner to know their responsibilities and commit to them. Dividing responsibilities among the operations should be based on existing strengths and weaknesses. The ideal partnership allows both parties to participate in ways that help each other grow. There should be enjoyment and flexibility in the relationship to allow for creative collaboration and mistakes.
Short-term vs. long-term effects from a partnership
Part of building a successful entrepreneurship is assessing both the short-term and long-term effects of business decisions. Forming a partnership can impact your organization’s perception among the public, as well as financial obligations. Be clear on the roles and insurance responsibilities of each partner to avoid surprises.
Your entrepreneurship goals can accelerate with the help of a business partner. It’s wise to avoid rushing into a partnership and first learn the entity’s background, goals and financial outlook. Once you’ve concluded the candidate would be a great fit for your business with minimal risks, then you can unite and begin collaborating.