Editor’s note: This article was first published in September 2010. The remark that banks “these days” are unwilling to finance projects reflects the credit squeeze of that time.
There’s a line that caught my attention in the book by Javier Fernández Aguado, author of Las claves del éxito para emprendedores (The keys to success for entrepreneurs): “It is said that the best number of people to work with is an odd number lower than two**.” He’s right, although there are several reasons why we may need a partner on the road to entrepreneurship.
The first reason someone looks for a partner to start a business is financial: we’d rather bring in more equity than seek financing from a bank, and banks these days aren’t exactly keen to fund our projects.
But if we’re honest about what we should really be looking for in a partner, it’s a second business perspective and a second area of expertise. A partner should complement our knowledge and make up for some of our shortcomings.
Factors to consider when choosing a partner
1. Never look for a partner just to put up the money and come by every month to collect the profits. For that, don’t look for a partner, look for an investor. Otherwise you’ll end up with something much worse than a bank: someone who wants profits without taking any interest in the business’s problems.
2. Look carefully into whether your partner has had tax problems or appears on the ASNEF or RAI lists (Spanish registers of unpaid debts). If so, you’ll only be tarnishing your company’s image, turning it into an untrustworthy business every time your partner’s name comes up.
3. It isn’t right to pry into someone’s personal life, but when choosing your partner you should know him better than his own wife does. If you let someone with a drinking problem or some kind of gambling addiction into your company, you’re putting your whole project at risk.
4. When choosing a partner, try to find someone whose knowledge is different from yours and who brings another kind of value. For example, if you’re an expert in manufacturing, look for a partner who’s an expert in sales. If you both have the same specialty, you’ll end up with a gap that can only be filled by another hire or a third partner.
5. Chemistry is essential in business, just as it is in marriage. Your partner is someone you’ll spend a large part of the day with, so make sure the chemistry is good; otherwise the relationship will end in a business divorce.
6. Ambitious people are excellent for business, but people with delusions of grandeur end up being a problem as soon as the business starts making big profits.
7. Don’t be afraid to put everything that needs it in writing. It’s better to make things clear from the start. That way your partner can decide whether or not to accept your terms, and there won’t be problems later on.
8. Invite your partner to dinner at home with your wife and, if possible, with his. You’d be surprised how many things can come to light over an ordinary dinner. Your wife will also use her feminine intuition and give you her opinion, which, even if it isn’t conclusive, you should at least listen to and think about.
9. Always try to keep 51% of the company. If the idea is yours and you took the first steps, never give away what you started fighting for.
10. If possible, try to widen your circle of friends and offer the partnership to people whose behavior and character you already know. You’ll always make clearer, safer decisions than by letting in a stranger because of the impression they made on you over a few meetings.
Remember: if you’re almost certain to have your differences in the future even with honest, sensible people, imagine what will happen if you let someone into your business with whom you lack compatibility and chemistry from the very start.
Further reading
- The entrepreneurial mindset, by Donald Trump
- How to run a business in times of crisis
- The advantages of starting a business in times of crisis
- Why new businesses fail
Featured image: Paulien Osse, CC BY 2.0, via Flickr.
