At a glance, entering into a business partnership might seem like a brilliant idea.
After all, two heads are better than one, right?
However, not all partnerships end in success stories. Whether it’s a full-blown joint venture or partnering up with another company in your space, treading lightly is almost always the answer.
That’s not to say that every partnership has the potential to end in disaster, but rather business owners need to know what to look out for before committing to anything major.
In fact, we’ve broken down five points to consider before entering into any sort of partnership.
Is The Relationship on the Legal Up and Up?
Getting into business with the wrong sort of people can land you down a nasty legal rabbit hole. Obviously you should stay away from shady characters, but bear in mind that something as simple as a client trying to “win” a contract via gifting could actually be a bribe.
A business relationship built on such grounds is bad news. As noted by Reciprocity Labs, there are tons of points to consider when dealing with the legal security of your business but it’s the nature of the beast these days. This includes business partnerships as well.
Do You Trust Them?
It may sound cliché, but trust the cornerstone of any person or professional relationship. Even if someone is offering an amazing deal on paper, you can never commit 100% to a partnership if the element of trust simply isn’t there. This is where nagging feelings and gut instructs can make all the difference.
Don’t be afraid to ask questions and get to the point so there’s total transparency between you and your potential partner. If there’s any hesitance, there’s cause for concern.
What’s Their Track Record?
When looking at potential partnerships, bear in mind that you absorb everything from their business history to reputation as a result. Consider what they’ve done and what blemishes (or accomplishments) they might have on their books. A bit of Googling can tell you quite a bit; meanwhile, any of your partner’s claims should be backed up with concrete proof.
Do Your Personalities Clash?
Look at the various personality types of entrepreneurs, it’s clear to see that not everyone is going to get along. For example, you have your risk-takers who want to jump head first at problems and you have those who want to be calculated and data-driven. Similarly, you have big-picture visionaries and the realists that keep them grounded.
There’s nothing wrong with clashing personalities as sometimes conflicting qualities can actually complement each other (think: the principle of “opposites attract”). That said, while you don’t need to be best friends with partners, you should at least be able to tolerate whoever you’re working with.
Do You Need Them? Do They Need You?
One of the biggest red flags of business partnerships is in engaging a relationship that effectively boosts one party but does nothing for the other.
There’s nothing wrong with partners of different sizes putting their heads together but you don’t want to be taken advantage of. Bear in mind that not everyone might even do this consciously, either. As such, there’s nothing wrong with asking the question of “What’s in it for me?”
With all of this in mind, there’s no reason why you shouldn’t consider a joint venture or business partnership somewhere down the line. Just need to cover your bases before signing on the dotted line or putting your business reputation at risk.
Keeping these pointers in the back of your mind, you can quickly identify whether or not a partnership is truly worth pursuing.
