So your business is picking up, surpassing its KPIs, and is growing at a faster scale than you have anticipated.
Between tending to orders, marketing, selling and managing your new staff, you are juggling more hats than you could manage. If this is you, you might want to consider teaming up with someone on this business venture. While starting a business can be done on your own, no empire was ever built with just two hands.
Kinds of business partners
But before jumping on the partnership train, consider the capacity you’ll need to delegate. Do you need a full-time 50/50 business partner? A partner just to help out with marketing? Or a partner who can provide extra capital? Reflecting on capacity distribution will help you decide which between these two kinds of partnerships you’ll need and what skill set they should have.
General partnership is when all partners actively participate in business-building from investment, management, to everyday operations. While co-founders usually decide on an equal split of everything: equity, workload, and profit, there’s also a type of general partnership where one partner owns more than the other. Partner A could have 70% equity while partner B gets the remaining 30%, granted that partner A invests more money in the company and does 70% of the everyday tasks, too.
Limited partners are basically investors. These are your “silent partners” who invest a certain amount of money to be a part of the company without being involved in the daily activities and decision making of the business.
If partner A and partner B are co-founders and decide they want to scale their business but need more capital to make this happen, they can engage partner C in a limited partnership, wherein partner C gives x amount of money in exchange of equity.
The biggest differences between the two partnerships is participation in everyday tasks and liability. In case something bad happens to the business, limited partners’ cannot be sued and their personal assets cannot be chased after, wherein that of a general partner can.
Questions to ask when looking for a business partners
What can they contribute that you can’t?
Ideally, your business partner should be able to fill in the gaps and complement what you do, not copy it. Having a partner that complements your skill set not only makes your business more sturdy, but also gives you an extra pair of eyes that covers your blind spots.
What is their life’s mission?
Partnering with someone is like marriage; your values have to be aligned from inside out. And to make it work, you’ll need a partner who has a similar life mission as you. Maybe it’s social change, financial stability, credibility, or industry disruption. Being aligned on this ensures that all partners will be as committed to making the business succeed as if their lives depended on it, because it does.
What’s their exit strategy?
Every business has 3 exit points: sell your business to a bigger company, go public, or pass it on to the next generation. Choosing a business partner who understands this and can agree with you on the exit, will save you future lawsuits. This will also help you make everyday decisions that direct your business towards your exit strategy.
Do they know how to fight?
Like any relationship, you and your business partners are bound to disagree on some things. And the deciding factor to knowing if that partnership will make it through is whether they know how to fight or not. Get a partner who is able to keep things professional even in the heat of a disagreement. Set boundaries to manage conflicts and set them early to see if your potential partner can abide by them and put the business first.
Are they reliable?
Do they take accountability for good and bad things? Do they show up on time? Do they bring more solutions than problems? Do they communicate effectively? Do they prioritize integrity? Remember that while nobody is perfect, it’s always nice to know how your partners will respond and if they truly have your back.
Where to find these potential business partners
Potential business partners could be friends, previous employees, friends of friends, or complete strangers. While there is no clear-cut answer to this, here are a few tips to getting closer to meeting your potential business partners.
The conservative route
Here’s where you depend on personal referrals from your friends, former schoolmates, and mentors. You can put out the word for the kind of person you’re looking for and wait for referrals. You can also be a bit more proactive by connecting with like-minded people and attending webinars and networking events like #RaidTheFridge, or startup meets.
The modern route
And just like dating there’s a whole world of potential business partners on the internet. You can do a LinkedIn search or check out apps like Techofounder, Founder2be, Cofounderslab, Startupjobs Asia, Start Hawk, and many more!
It might take months, years, or even a few failed business marriages to get it right, but it’s all about learning from every endeavor and making sure you take the time to really know these potential business partners before signing above the dotted lines.