Starting a business is notoriously difficult, and going it alone can make those challenges even harder to overcome. That's why many entrepreneurs choose to launch their company with one or more business partners who can help lighten the load.
"Finding good business partners is critical to success," said Sherry Fox, co-founder and chairman of LumiWave. "There are many different types of partners, from someone who works with you side by side to build your business, to individuals or companies who contribute in specific areas, such as marketing, engineering, etc. Every person or entity that interacts with your business is a partner in some way and affects your ability to succeed."
"I believe there is strength in numbers," added Carlo Ruggiero, co-founder of the U.S. branch of European pizza franchise Kono Pizza. "When multiple partners share the same vision, the result is a stronger and more unified team."
But you can't just choose anyone to be your partner; you need to be able to work with that person day in, day out, and both of you must be able to focus on the business's objectives.
Sabrina Parsons, CEO of Palo Alto Software, likened a business partnership to a marriage. "Your partner is such an important piece of [your] success, and many times, bad partnerships lead to bad business," she said.
If you need a partner but aren't sure where to start, here's how to find, evaluate and work with a prospective business partner. [See Related Story: https://www.businessnewsdaily.com]
Look to your network first
Our expert sources agreed that an entrepreneur's connections are the best candidates for potential business partners.
"Reaching out to your professional network can provide a rich list," said Jon Weston, CEO of LumiWave and Fox's business partner. "I've received good information and direction from the diaspora of my [previous] companies. General networks or online community groups are too anonymous to find good feedback."
Referrals from trusted colleagues also can be helpful, Fox added. However, Weston cautioned that you should gauge the person making the referral before considering his or her recommendation.
Evaluating a business partner
Once you've found someone who could be a great potential business partner, how do you evaluate whether that person is truly the right fit? One of your first considerations should be how your personalities, backgrounds, values and experiences complement each other.
"While you want a partner that will work well with your culture and style, you don't want a clone, either — you want a partner who can fill in the gaps," Weston said. "That is the tension you need to look for."
Similarly, Ruggiero said he and his co-founders, David Ragosa and Greg Kinlaw, needed the right combination of personalities and skills to succeed.
"[Our] differences allow us to approach each situation in multiple ways," he told Business News Daily. "David and I are the go-getters. Greg provides a great balance — he is an expert at taking our crazy ideas and making sure we have the numbers to back them. We are constantly learning from each other and are able to use these exchanges to positively influence our business."
However, getting along well isn't enough to ensure a successful partnership. No matter how well you know your potential partner, you're still running a business and thus need to take the appropriate precautions to ensure that any partnership is a smart decision. Weston noted that thoroughly researching your partner is an important part of this process.
"Do your due diligence," Weston said. "You can do a lot [by] just Googling. Most people and organizations leave a digital trail. Dive into the legal databases. Ask for references, but also research any clients they have worked with or been associated with, and contact them."
Fox agreed, noting that you should vet a partner carefully with all sources available, such as LinkedIn, company websites and former partners. Parsons also advised formally interviewing a prospective partner to better understand his or her skill set.
Finally, before you sign any legal agreements, you must understand how you and your partner will handle a variety of business situations. This is something to discuss at length during your evaluation phase.
"Make very clear [written] agreements that take into consideration what happens when things go well and when things go poorly," Parsons said.
"Talk openly and frankly about who you are and what you want," Fox added. "Spend significant time exchanging ideas and concepts, [and] understand their ... short-term and long-term [goals]. Do you agree on the end game?"
Making a partnership work
Think you've found the perfect business partner? Based on their experiences, our sources offered a few pieces of advice for a fruitful and productive partnership.
Define your respective roles. Clearly defining your roles within the company ensures that each partner's time is spent effectively, Ruggiero said. This will prevent partners from stepping on each other's toes and will ultimately save the company money.
Measure your success. Fox recommended that potential business partners work together on a trial basis to test out how well the partnership might work.Set up some parameters and milestones, and make sure what you thought about the potential partner is reality, she said. From there, conduct frequent reviews to make sure you are still on the same page.
Communication is key. Constant honest and open communication is a must. When problems arise, they need to be solved by both (or all) business partners. Ruggiero reminded entrepreneurs that at some point, each partner will make a mistake, and you cannot be afraid to bring it up. Each partner needs to do what's best for the business, he said, and part of doing this is eliminating any negative emotions to avoid a dispute if someone points out a mistake.
Trust your gut. If something doesn't feel right, it probably isn't. Weston recalled "little red flags" that popped up in conversations with potential partners.
"Some things don't quite mesh or add up in the back of your mind. Trust this," he said. "It is easier to walk away and be picky than pick up the pieces later."
Some source interviews were conducted for a previous version of this article.