NEW YORK (AP) — When small business owners want to take on partners, the selection process needs to be carried out thoughtfully and deliberately. The wrong choice can doom not only the partnership, but the…
NEW YORK (AP) — When small business owners want to take on partners, the selection process needs to be carried out thoughtfully and deliberately. The wrong choice can doom not only the partnership, but the company.
Some things to consider before entering into a partnership:
— When picking a partner, use the kind of vetting process used to hire an employee. That means some intense conversations with a lot of questions about qualifications, expectations, short-term and long-term goals, even philosophies about doing business. Owners shouldn’t take shortcuts — even if a potential partner is a friend of a friend, that’s no guarantee they’ll be a good fit for a company. Owners should ask a prospect’s co-workers or business associates about their professional strengths and weaknesses.
— Look for a partner whose knowledge and skills complement yours. Don’t automatically choose a partner who knows as much as you do, or whose knowledge matches yours. “There’s no benefit to the partnership if you’re not learning anything new,” says Michael Howard, a management professor at Texas A&M University’s Mays Business School says. At the same time, some overlap is needed so you and your partner “are speaking the same language,” he says.
— Partnerships are more likely to succeed if all the partners are making some kind of investment — either money or equipment or another form of property — in the company, says Sandy Jap, a marketing professor at Emory University’s Goizueta Business School who has done research into partner selection.
“That way, you have people who are dedicated and who are working on making this partnership work,” Jap says. “They’ll do what’s best and they’ll stay with the partnership.”
— Have an attorney with expertise in partnerships draw up the agreement that will not only form the partnership, but also govern how it will be unwound.
— When the partnership is up and running, remember that there are going to be disagreements, and that they can help a company grow in the long run.
“Even the best of partnerships, and especially long-term partnerships, are not without friction,” Jap says.
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