I have had my fair share of good and bad business partners.
The biggest mistakes I made, were not knowing them very well, failing to do my due diligence and just jumping in too quickly.
Just like a marriage that starts off all violins and roses, business partnerships can quickly turn into heartbreak, anger, court and massive legal fees.
Great businesses, can be severely damaged by bad partnerships and never reach their full potential.
Here are some points to consider in order to, avoid bad partnerships :
- Can you trust this person with your personal bank account? If the answer is no- think again
- How stable is their personal life? Personal problems can easily encroach into the professional
- If you don’t know this person very well, do a trial run for a specific period before finalising the partnership
- Don’t partner with someone just because you can’t afford to hire them. It is better to hire them as a consultant first, than to give away equity and find out later, that they are a bad fit for you.
- Consider a partner who has different strengths to you. You need balance if you want to grow profitably
- Agree in the beginning, to institute a formal agreement, on how any capital that is raised, will be used and how profits will be distributed
- Agree on a formula to determine the value of the company, in the case of someone wanting to exit. Buy/sell agreements can be a real life saver, if things do go pear shaped.
- Set your emotions aside and think rationally- all the time.
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