Before choosing a business partner for your startup, there are factors you need to consider. Partnership is one of the most popular business models in Nigeria. And for good reason. Building a business alone can be quite challenging and overwhelming.
So a lot of people think: “Why not get a partner or partners who have similar vision and will help build, fund, or run the business.
The truth is that the stakes are high for certain kinds of businesses, especially a startup. In this case, the relationship you build with your partner can determine the success or failure of your venture.
Regardless of the kind of startup you’re building, having the right partner can make all the difference in ensuring your business thrives.
To get the right partner, there are qualities and factors you need to look out for. To help you simplify the search, we’ve outlined 10 of those factors in this article.
10 Factors to Consider Before Choosing a Business Partner for Your Startup
Here are 10 critical factors to consider before choosing a business partner for your startup:
1. Shared Vision and Goals
First of all, you’re starting a business or startup because of a vision you have. With that, it’s right to say that a successful business partnership begins with a shared vision.
For this reason, you have to ensure that both you and your partner have alignment in the direction of the business, long-term goals, and values.
To gauge this alignment, you should focus early discussions on where you both see the business going in 5, 10, or 20 years. Ask questions to understand if they truly share your vision or if they are after the money.
This alignment ensures that both parties are working towards the same objectives and helps prevent conflicts in future.
On the contrary, misalignment on shared values and goals can lead to disputes and derail the business. So, ensure that both you and your potential partner have similar aspirations for the company’s future.
2. Complementary Skills and Expertise
One of the main advantages of having a business partner is to pool your different skills and knowledge together.
When looking for a partner, aim for someone who complements your skills rather than duplicates them.
For instance, if you are strong in sales and marketing but lack financial acumen, a partner with a strong background in finance could be invaluable.
What if you’re well versed in finances but don’t have so much technical knowledge of the industry you’re playing in? The best fit will be to get a partner who is an expert on your startup field.
The point is to ensure that all aspects of the business are covered by capable hands. This way, you can have a more effective management team and better outcomes.
3. Financial Stability and Contributions
Make no mistake, financial stability is important in a business partnership. Discussing financial matters openly is essential.
You need to understand your potential partner’s financial situation and ensure it aligns with your expectations.
Are they financially stable? Do they have the resources to invest in the startup if needed? Do they have a steady income?
Regardless of how much you already have, it’s advisable to go for a partner with some level of financial weight.
The reason is because financial troubles can cause significant stress and impact their ability to contribute effectively to the business.
It’s also essential to agree on financial contributions and equity shares to avoid conflicts later on. So before finalizing your partnership, assess your potential partner’s financial health as much as you can.
4. Work Ethic and Commitment
The success of a startup often depends on the hard work and dedication of its founders.
In Nigeria and everywhere else in the world, building a startup is incredibly demanding. For this reason, it’s important to partner with someone who has a similar work ethic and level of commitment.
How do you find out the commitment level of a potential partner? Discuss how many hours each of you is willing to dedicate and whether you both are ready to make the necessary sacrifices.
Also, discuss your expectations regarding responsibilities, and the effort required to make the business succeed. A partner who is not fully committed can become a liability.
So ensure that your potential partner has a strong work ethic and is as committed to the business as you are.
5. Communication and Conflict Resolution
Effective communication is vital for a successful partnership. Partners must be able to discuss ideas, challenges, and strategies openly and constructively.
Evaluate how you and your potential partner communicate. Are they open to feedback? Do they listen actively? Can they handle conflicts calmly and professionally?
Regular and transparent communication helps in addressing issues promptly and maintaining a healthy working relationship.
On the contrary, miscommunication or lack of communication can lead to misunderstandings, frustration, and ultimately, a breakdown in the partnership.
A 2022 survey by Statista found that 19% of startups fail because of disharmony between partners/team members.
To avoid being part of these statistics, ensure that your partner is as dedicated as you are to the success of the business by communicating openly and honestly about the business.
Additionally, it’s important to discuss how you will handle disagreements. Establishing a clear conflict resolution strategy will help manage disputes effectively and maintain a healthy working relationship.
6. Trust and Integrity
Trust is fundamental in a business partnership. You need to be confident that your partner will act in the best interest of the business and not engage in unethical behavior.
Look for someone with a strong reputation for integrity. It’s advisable to perform due diligence, including background checks and speaking with previous business associates, to ensure your potential partner is trustworthy.
The point is to be sure your business partner is someone you can rely on, both professionally and personally.
They should be dependable, honest, and have a strong work ethic. Without trust, the partnership is likely to face significant challenges.
7. Problem-Solving and Decision-Making Abilities
Running a startup means you’ll have to deal with multiple challenges daily. Sometimes, in the course of solving these issues, you’ll need to make a thousand decisions.
A good business partner should possess strong problem-solving and decision-making skills.
Evaluate their ability to analyze situations, weigh options, and make sound decisions, especially under pressure.
According to the World Economic Forum, creative and analytical thinking (problem-solving) skills are two of the top skills required in the workforce today.
A partner who excels in this area can help steer the business through uncertainties and capitalize on opportunities more effectively.
Furthermore, your decision-making styles should be compatible. Some people are decisive and prefer quick decisions, while others take a more analytical approach.
Understanding how you and your potential partner make decisions can prevent frustration and inefficiencies.
8. Risk Tolerance
Every business venture comes with its share of risks. On that note it’s important to understand your partner’s risk tolerance so you can make joint decisions effectively.
Are they conservative or aggressive in their approach to business risks? Do they prefer a more cautious, steady growth, or are they comfortable with taking bigger risks for potentially higher rewards?
Aligning your risk tolerance with that of your partner helps in making coherent and mutually agreeable decisions.
It’s important to discuss and agree on how risks will be managed and what level of risk is acceptable for the business.
To get the right feedback, you can even give them scenarios or case study tests. Just be sure that you don’t put them under pressure while asking the questions.
8. Legal Agreements and Structures
Establishing the legal structure of your partnership from the outset is critical.
This includes ownership stakes, roles and responsibilities, profit-sharing, and exit strategies. Having clear, legally binding agreements can prevent misunderstandings and disputes.
If you’re bringing in a family or friend as a partner, the temptation to keep things informal can be overwhelming.
But several cases have shown that partnerships with well-defined legal agreements have a higher chance of long-term success.
Before entering into a partnership, you need to put these legal structures in place. The process of explaining the structure to potential partners can help uncover any potential red flags that could pose a risk to your business.
Consulting with a lawyer to draft these agreements can provide a solid foundation for your partnership.
Their expertise can provide valuable insights and ensure that you enter the partnership with a clear understanding of any potential liabilities or obligations
9. Networking and Connections
A partner with a strong professional network can provide valuable opportunities for your startup.
If connections are important to you, consider the potential partner’s network and how it can benefit the business.
Assess the strength and relevance of your potential partner’s connections. Are they well-connected in the industry? Do they have access to potential clients, suppliers, or investors?
The truth is that in today’s business world, a well-connected partner can significantly accelerate your startup’s growth and success.
To take it further, the right industry connections can also lead to new clients, partnerships, and investors, as well as valuable advice and mentorship.
10. Exit Strategy
While it might seem pessimistic to consider an exit strategy at the beginning of a partnership, it’s an important aspect of prudent business planning.
Discussing and agreeing on an exit strategy ensures that there are clear guidelines for ending the partnership if things don’t work out as planned.
An exit strategy could include buyout agreements, procedures for selling the business, or how to handle a partner’s departure.
Having a well-defined exit plan helps prevent conflicts and provides a clear path forward if the partnership needs to dissolve.
Get the Right Partner for Your Startup
Partnership businesses is designed in a way that allows the input of two or more partners. If you’re initiating the startup idea, you will need to take the task of finding a suitable partner seriously.
Thankfully, good and knowledge partners abound, you only need to look in the right direction and ask the right questions.
When you take the time to carefully select the right business partner, you set the foundation for a strong, collaborative, and prosperous business venture.
Remember, a good partnership is not just about shared success but also about weathering the challenges together and emerging stronger.
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