One of the biggest decisions that an entrepreneur will ever make is whether or not to partner with somebody. This seemingly simple decision is fraught with complexity and can make or break your fledgling company.
There are a number of factors to consider when deciding if you should bring on a partner. Aspects such as religious views, political bents, work ethic, and financial situation all play a part in deciding who you should partner with.
Make no mistake, when you choose to share your company with somebody, you are inviting that whole person into your enterprise. This includes the good, the bad, and yes–the ugly.
When considering if and who you should partner with, ask a lot of questions and don’t be afraid to ask the hard questions. In some of my companies, I call this process the “getting naked” part of the relationship, where both of us can agree that no question is off limits.
The purpose of “getting naked” with your potential partner is you need to know everything about this person that could affect the business. Here are a handful of questions to start with to know whether you should partner with somebody.
Is anybody suing you right now?
You need to know if your potential partner is immersed in litigation and you should ask this question. The last thing you and your startup need is lawyers taking up your time, money, and partner’s capability to contribute to the company.
This could be a bankruptcy, fraud, or any other litigation. Ask this question, listen intently, and probe if you have to. Remember, part of doing business is getting sued, so this is not necessarily a bad thing. You should know what you are getting into beforehand, though.
What is your credit score?
This is not the end-all and be-all, but it is a good baseline for you to understand your potential partner. A credit score can tell you if your colleague pays his bills on time, is consistent in repaying obligations, and how serious of a financial person he is. Not only that, this could seriously affect the type of loans your company may qualify for.
On the other hand, any entrepreneur who has gone through the ups and downs of building a company knows that credit scores tank at times. Take this with a grain of salt, but you should know the financial literacy and integrity of the person you are considering doing business with.
How much money is in your bank account?
You need to know if your partner is self-sufficient, relying on you, or wishing for the moon to “make it big”. If it’s the last one, get rid of this guy immediately.
Bank accounts don’t tell the whole story but it can tell part of the story to help you understand who you might be doing business with. Your potential partner does not need to have $1M in the bank, but if he has a negative balance for the last 3 years, that might be worth asking about.
If nothing else, asking for this transparency shows whether your potential partner is willing to be transparent and share the nitty gritty financial details with you, or if he’ll try to hide something from you in the future.
What are you ashamed of?
This may sound like a strange question to ask, but there is a lot of value in it. Depending on the answer given, it will tell you a lot about the value system of the person.
For example, if somebody tells you that he is absolutely ashamed of walking out of a job when he was 16 without giving a 2-week notice, that can tell you a lot. It tells you he has a sense of empathy, regret, wisdom, discernment, and the ability to look back on past mistakes and learn from them.
On the contrary, some people are not ashamed of anything and that is a major red flag. We all make mistakes and there are things we’ve all done that are shameful. Being able to own your poor behavior, learn from it, and share it, is a valuable trait to have in a business partner.
Any outside relationships?
This could be a major deal-breaker for some business partnerships. What you’re trying to get at here is whether or not there are mistresses or “other” relationships on the side. This may sound edgy, and it is, but it’s absolutely important for you to know the answer.
If you are considering sharing your company with a partner, then you need to know if there is a crazy ex who will come around and start demanding profits by getting attorneys involved or going public with some sort of news.
Again, this isn’t a value-judgment, it’s just covering your risk and knowing what you are getting into by partnering with somebody. We all bring baggage, you need to know what your partner’s baggage is.
What will you sacrifice?
Without a doubt, you need to know the answer of this question from your potential business partner.
This includes not only material things like money, luxury items such as house or car, but immaterial things like time, relationships, and career opportunity.
Perhaps more importantly, you need to find out if your potential business partner will sacrifice things like integrity, honesty, contractual obligations, and principles of moral character. When you partner with somebody, you partner with that whole person and you need to have somebody who matches your moral fiber, otherwise your business will be in a whole world of pain.
If you were me, what would you want me to know about you?
This is a terrific catch-all question if you feel like there might be something you’re still missing. Potential answers could include nothing at all, all the way to some totally crazy, random thing that you would have never thought to ask about.
When I was 20 years old and living off-campus, I decided to share a nice town-home with a handful of friends. We did the usual preliminary questions about drugs, drinking, expectations, and we thought we were set to go. After signing the lease contract, one of the friends decided to tell us that he was a male stripper and that part of his life would overlap with our time together in the house with his guests and work-hours. This is one of those things we would have never thought to ask, but would have been good to know. Yes, it’s a true story.
Will you be in the news or any reason I need to know about?
Very similar to the question above because there some things you just don’t know to ask but should know before partnering together. This could include big scandals, political events, financial fraud, or allegations.
What you’re trying to discern here is if there are big, public things that would detract from your business or seriously harm it. For example, if your would-be partner is about to be featured in the New York Times as one of the top ten crony financial advisers in New York, you should know about that.
Will you cross the line in gray areas?
This might sound like a complete no-duh answer to you, but many people are willing to cross the line and work in gray areas. At the end of the day, it comes down to your ethics and what you want to work with from other people.
Surprising to me, some candidates for employment or partnership positions will quickly answer, “of course, I’ll do whatever it takes!”. This is exactly the wrong answer.
What you want to hear is somebody who can think through a complex problem, understand the options available and that no option is perfect, and then begin to reason through the options, ultimately landing on the ethical options, even if they are inferior in results to the unethical options.
Why do you want to do this?
This is probably the biggest question to ask and his answer is important. What drives your potential business partner and what is his big end goal?
Is it money? Fame? These are fine, but might not be a good fit if your purpose is to build a company that generates enough wealth so that you can donate millions to nonprofits.
You and your potential partner need to be in alignment. You don’t have to be perfect together or exactly the same, but both of you need to share a common vision, purpose, and intent for the company.
To partner or not to partner
At the end of the day, you need to determine what the purpose of your company is and why you are considering a business partner.
I can tell you from personal experience that having the right partner can be one of the most rewarding experiences in life because you get to share the journey together and build something wonderful.
At the same time, picking the wrong partner can be devastating, painful, long, and ultimately end in your company failing. This happens….all the time.
So, be sure to do your due diligence, ask the hard questions, and pick the right partner so that your company can go to the next level.