Almost one in three small businesses fail within their critical first two years and more than 50 percent will fail within the first five years according to Gallup. The main reason for such high failure rates is lack of experience. As an entrepreneur, the best way for you to combat your lack of experience is by choosing the right business partner.
A business partner will be the most important relationship that your "work life" will ever have and should be someone that will offset your qualities and bring different strengths to the table. Most high-growth companies start with two or more people pooling their resources to achieve common goals. And that's difficult. It is hard to find someone that is the perfect balance of traits, experience and values to yours. Consider the following four questions:
Do They Have a Complementary Skill Set?
The old adage "look within yourself first" applies here. Your first step in finding someone with a complementary skill set is to figure out what your skill set is. You can only do that by being honest with yourself about your strengths and weaknesses. Often, people will pick partners who are clones of themselves. Other times, they pick people who are so different from themselves that they are in constant conflict. Find someone who complements your skills, not contrasts with them.
Are they able to invest time and money?
Not every potential partner will have the personal resources to invest as much into the company as you have, but they should be willing to invest as much as they can afford. When lenders and venture capitalists see that your partner is substantially invested in your company, it makes them more willing to invest their money. On the flip side, a partner should also be willing to invest time into the business. If you have followed my first tip and found someone that complements and adds to your skill set, then they will need to invest time. Your partner should have a specific role and they should be willing to fulfill that role.
Are they able to bring new business or leads?
Business partners may bring with them valuable contacts that can lead to sales. For instance, if you have just come up with a new and innovative business solution, your new partner may bring contacts to company heads who will jump at the idea. Your new partner can use their previous relationships with these company leaders to secure new business contracts for your company.
Do your goals and vision align?
How do you want your company to look down the road? Make sure that the person whom you are considering as a business partner has business goals that are aligned with yours. In other words, you should both want to create the same thing. Remember, it is better to find out upfront that you don't have the same business goals than when you have signed an agreement and have all of your equity on the line.
Furthermore, you may want the same thing, but have different ideas about how to get it. If the person values fast profits over quality while you value quality and customer service over profits, you may eventually have a tug-of-war over which route to take to achieve your shared business goals.
In many ways, having a business partner is a marriage of sorts. You will be spending a lot of time with this person, so you need many of the same things that you would need in a good marriage. You need to dig very deep to know who this person really is before you decide to enter into a relationship with them. Sometimes, this means asking some very difficult questions, but if you ask the important questions before you enter into business with this person, you can prevent a lot of the headaches that can plague your partnership and jeopardize the future of your business later.
Corey Bray is the CEO and founder of LegalNature. A serial entrepreneur, Corey has successfully exited several startups and is currently focused on revolutionizing the business document industry.