In all phases of our lives, choosing the right partner can be a complex process. Whether you are selecting someone to share your life with or finding the right business partner to launch your own company, you want to make sure you choose wisely.
Choosing the Right Business Partner - 8 Guiding Principles
Without the proper consideration of partner attributes, you could be heading for a messy divorce – or business dissolution – soon after walking down the aisle. Here are 8 tips to help you choose the right business partner.
1. Run Away from the Part-Time Entrepreneur
In any business model, all stakeholders need to be fully committed to making the business a success. Partners who may only wish to test the waters before committing may not be the best choice. Starting a business requires full focus and dedication; someone who wishes to stay on the sidelines until the business takes off before joining the team is often a poor fit for the continued success of the new company. All partners should be ready to take on the same risks and the same commitment to ensure a strong team.
2. Do Your Homework
A critical part of choosing the right business partner is the process of learning about them. There are many ways to go about finding background information on them, such as their business practices, their leadership attributes, and their reputations. A great first step is to speak to the people in your own business network about potential partners’ reputations.
Next, you should conduct an extensive online search, looking for any negative information like poor reviews, pending lawsuits, outcomes of prior lawsuits, and general information about their business practices.
Finally, gauge their leadership abilities by watching and listening to how the potential partners treats his or her own employees. Watching the responses of those employees can tell you a lot about how their thoughts as well. An extra tip is to schedule a lunch or dinner with the potential partner, then see how he or she treats restaurant staff.
3. Watch for Too Many Priorities
In business partnerships, partners rarely have only one operation running at a time. Having other business interests is great, but one must be careful that those other priorities allow for time to focus on the new partnership. If a potential partner’s role and responsibilities are not clearly defined at the outset of the partnership, this could lead to problems down the road. Just like in our first tip, partners sharing the same commitment is the key to success, while differing priorities can spell disaster.
4. Yin and Yang
When choosing a partner, you want to select someone who brings unique attributes to the partnership. Not everyone possesses the same skills or experience; and partnerships allow business professionals to create a system by which everyone’s skills contribute to the overall success of the venture. It is critical that each partner identifies strengths and weaknesses, then evaluates those attributes in terms of the benefits a partnership will bring to the new project. Ideally, partners will fill each other’s’ gaps, building a robust team that is capable of achieving their goals.
5. Unbalanced Responsibilities
In a business partnership, all stakeholders must be prepared to put in the work to make the venture succeed. Sometimes, however, partners in a venture may not be balanced; this can arise from poorly-identified responsibilities and roles, or may be the result of lack of experience in a particular aspect of business management. Be wary of someone who isn’t willing to roll up his or her sleeves to contribute equally.
Financial imbalances among partners can also cause problems. Some potential investment partners may want a management fee for their time, and this often leads to friction. Nominal management fees of 5-7% are not unreasonable, watch out for investors who are simply attempting to boost their net worth with exorbitant management fees and little added value to the venture’s launch.
6. Focus on Truth
Business partnerships thrive in an environment of transparency. Hiding failures or mistakes from partners is not only bad form, but it can put the venture in jeopardy. Ideally, partners must be able to own up to their mistakes and use them as learning tools to avoid the same or similar mistakes in the future. Failure to disclose any issues may ultimately affect the continued success of the venture, and partnerships with those who shirk their responsibilities and hide their errors should be avoided at all costs.
7. The Value of Likeability
In the perfect business partnership, the partners actually like one another. Being on friendly terms helps strengthen bonds. Remember that as you establish and launch your business, you will be spending a lot of time with your business partners. Choosing one you actually like and respect, then, is crucial. One rule of thumb to consider is this: would you go on vacation with your new partner? If the answer is no, that person may not be a good fit.
8. Trust Your Instincts
No matter what type of business you wish to launch, and what types of partners you are investigating, if something seems off, it’s time to trust your gut. It is far better to walk away than to find yourself trapped in an unproductive business relationship. Your instincts are a valuable evaluation tool, and you need to be ready to address the potential red flags rather than to ignore them.
About 3XY Insurance Solutions
3XY Insurance Solutions provides innovative solutions and consulting services to insurance executives looking for a competitive edge. We develop exclusive programs and products; leverage markets, partnerships, and talent; and capitalize on digital capabilities to accelerate growth and increase profitability. Contact us today at 215-322-5497 and see if we can grow your insurance business and improve its profitability.
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