When you start your own business, it can be extremely stressful, especially if you are flying solo. However, finding the perfect business partner can ease the workload and enhance your company’s performance in 2023.
It can be incredibly lonely starting a business in today’s challenging economic climate. Partnering with a business partner not only offers companionship, but it also allows you to get more funding, ideas, and skills.
The following guide will cover all of the dos and don’ts while on the search for the Robin to your Batman. Having a business partner also comes with its fair share of pros and cons, so you can decide whether two heads are better than one.
What should I look for in a business partner?
Defining what you want from a business partner is the first step towards finding him or her. Ultimately, a business partner must contribute more than just money. Ensure that your skills complement each other by taking the time to choose the right mix.
It is important not to let emotions or personal feelings enter into this professional relationship when you disagree on something. It is important to note, however, that entrepreneurs have strong personalities. Starting a new business requires knowing someone thoroughly before you commit to it.
Before you even consider starting a business with someone, you need to answer these seven questions:
- Are they passionate about the business? A lot of your time will be spent on the project if you’re starting a business, so enthusiasm is essential.
- What are their plans for the upcoming months in terms of reliability? Are they committed to the business for the foreseeable future?
- Which skills do you offer and what gaps do they fill in your own offering? What will they do to help you achieve your business goal? Considering a partner in a different field is never a bad idea! Businesses can sometimes succeed with new audiences by gaining cross-sector experience.
- Is there any outstanding debt on their balance sheet? Loans may be restricted as a result.
- Is there a vision for the business that they adhere to? Are their ambitions and work ethics similar?
- Do you get along with each other? When your business starts, any relationship issues you have up-front are likely to be exacerbated.
- Depending on where your business partner is located, you might be limited when it comes to collaborating. Alternatively, if you are trying to penetrate new markets, it might be useful.
Where can I find a business partner?
You can find the perfect business partner to help steer the ship of your venture in a number of different places.
Networking events and meet-ups
Make the most of networking events by sharing your business interests with others. Developing a network of people will allow you to eventually find the right partner/co-founder through an associate, even if you don’t meet them immediately.
- The Federation of Small Businesses (FSB) holds networking events throughout the UK.
- Eventbrite offers tickets for smaller, local events. Find local networking events by searching for ‘business’ or ‘networking’ on Google.
- Your local Chamber of Commerce hosts over 200 B2B networking events each year as well as breakfast briefings exclusively for members. Additionally, there are ‘premium’ events that promise high-level networking for businesses.
- Coworking brands, such as WeWork and Regus, often host free events for small businesses and startups to attend.
Professional bodiesusually have a members area where you can network with others in your field.
Your social circle
Starting a business with a friend or family member is an option for some people. It isn’t always the best option for everyone, especially if you’re looking for a co-founder with a specific set of skills. The strain on your existing relationship can also be increased by starting a business with a family member or friend.
Connecting with like-minded businesses via channels like LinkedIn is a great alternative to attending events in person. A simple ‘@’ might start these conversations, but they could eventually blossom into a full-blown business relationship.
Much like Twitter, Facebook is no longer just a personal social networking site. With a huge number of “closed” groups dedicated to regional, national, and sector-specific networking, it’s now a full-fledged business networking site.
Accelerator and incubator programmes
You may be able to find a worthy business partner through an accelerator programme. In the tech industry, “boot camps” are very common and are designed to prepare fledgling entrepreneurs for business challenges.
In the event that you are accepted into one of these accelerators – though be careful, as many accelerators take an equity stake in return for membership – you will be able to network with like-minded individuals and pitch ideas to potential partners.
Most people think of investors as sources of capital for their businesses, but their expertise and track record in business can be just as valuable.
Investing in your business at the beginning can give you direction if you’re a rookie. If you need a co-founder, an investor can often connect you with relevant contacts in your industry and help you build new relationships if they feel you need a co-founder.
What are the benefits of having a business partner?
A person who oversees the day-to-day operations of a business faces one of the most challenging jobs in the world. By sharing the burden with someone you trust, you can share the ups and downs.
However, not all of the positives are personal. Partnering with a company can also give you access to many more resources and talents.
An alternate perspective
You should allow room for your new partner to develop if you already have a well-established business.
Getting feedback from someone in a different industry or region of the UK can be very helpful for fleshing out your idea and improving your audience offering.
In addition, if you encounter a problem, having a business partner with a different perspective will help you solve it more effectively.
It’s important to make smart decisions while keeping the process fun and inclusive
It is almost certain that your business partner will have previous industry experience and will bring with them a set of contacts from their previous roles that can increase your company’s prospects and profits.
You should be careful not to violate any previous employee contracts with this benefit, however. It is common for companies to stipulate that their workers cannot contact their clients after leaving the company. This clause can cause legal issues if not adhered to.
Access to finance
In today’s difficult economy, starting a business alone can be challenging if you’re struggling with finances.
Investing in your business will be easier when you combine resources. Furthermore, you might be able to secure more money if you apply for separate, individual loans.
A business run by a team is also more likely to attract investors – particularly venture capitalists. The risk is reduced and the responsibility is shared among multiple founders, so they tend to trust startups with multiple founders.
What can go wrong in a business partnership?
As we previously stated, having a business partner can be helpful at times, but on occasion it comes with its fair share of negative aspects.
Not having a partnership agreement
Partnerships between businesses are generally informal agreements. If everyone isn’t doing their fair share of the work, this can cause tension between partners.
In addition to a verbal agreement, it may be helpful to have something in writing defining the terms of the partnership, such as responsibilities, liabilities, and ownership.
Your agreement should include the following details:
- Contribution– What is each partner’s contribution to the business?
- Ownership– What is the share of each partner in the company?
- Distribution– How will profits and losses be shared among the partners?
- What are the responsibilities of a partner? (For instance, financial reporting)
Partnerships in business are similar to marriages. The relationship can work when it works, but it can also end in a messy split when it doesn’t. Partnerships are bound to have disagreements, but some may be more manageable than others.
Keep all communication on crucial decisions transparent to minimise the fallout from such scenarios. As any decision you make will have a direct impact on your partners, doing so will ensure you maintain their trust.
If there are any major disagreements, put them to a vote so that they can be resolved diplomatically or through negotiation.
Not having an exit strategy
Discuss your exit strategy in advance if a disagreement becomes unmanageable.
Here are some examples of exit strategies:
- Transferring the business to another management team
- Combining the company with another
- Selling the business to a family member or friend
- Putting an end to the business’s legal existence and paying off any remaining debts
Starting a business can be daunting, particularly when you are working alone. Working with a business partner helps to improve the efficiency of operations and create more effective solutions. Finding the right business partner is about more than just complementary skills – it is also about having similar interests, values and objectives for the organisation.
With due diligence and careful consideration of all factors, you will be able to find a person who you can trust and build a successful business with.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.