8 Important Questions Even Before Doing Business with Partners
Starting a business covers many aspects. Aside from the business concept and identifying the products/services, one thing, which lingers is having partners in the business.
Business ideas at times begin with a mere conversation among friends or family. One tiny spark may lead to having somebody pursue and see the prospects.
As a Business Mentor, I have seen entrepreneurs even discuss the idea using a napkin. There was even a time when one group had to pay for the table mantle as the exchange and flow were written.
Having partners may be a great idea to start with. Yet in my experience for the past 30 years, I was a witness to seeing the best of friends becoming best of enemies.
I thus have outlined questions for readers. They may not cover all but this is something to start. There are no right and wrong answers. It will depend on how comfortable each person may be.
Why do you really need a partner? Oftentimes I see people who cannot function of doing business without having other people around. Is it because of fear of failure or being surrounded with people who are serious and willing to put something at stake?
- Do you really know who the partners are? The most blinding factor is seeing the money before knowing the people joining. I strongly say the other way around. It is not the money, which should be the main attraction. More important is the kind of contribution to the entire business each person can give.
- Do you agree with the character traits of the partners? Beyond the money and contribution, the characteristic traits the partners have are the foundation of the partnership. Getting into business is fairly easy. Managing the business especially during the star-up stage may be something comparable to riding the toughest roller coaster. There are partners who never show up during project preparations. They are however ever present during launching or press conferences.
- Have you considered the respective spouses? The spouses have a say in the entry of their respective partners in business. Knowing and understanding the character too is important.
- Are the policies written, discussed, and understood? It is not sufficient to remain and agree on a verbal tone. As part of the compliance with Securities and Exchange Commission (SEC) there are set of rules to follow. However, go beyond these and arrive at an agreement to foster and sustain the partnership.
- If any of the children of the partners apply, what are the procedures? This certainly happens in many companies. What you do not like to see is the immediate occupation of the son or daughter to a higher management post or has the title “COO” or “Child Of the Owner”. It may and surely create waves in the entire company. I have seen companies where a policy of this nature is covered. This is like having the child comply with the required qualification and experience. The child starts training at the bottom of the company. One amazing experience I witnessed was seeing the eldest son of a big corporation beginning his training as a delivery boy of the commissary. He had to pass each stage and no special privileges were afforded. This was under strict orders of the Managing Director.
- If one of the partners wishes to sell out, what will happen? There will be times when any one of the partners may want to sell out. This may be due to some personal reasons. Nevertheless, what will be the steps be taken? Who may have the first option to buy and at what price?
- If there is another business one of the partners wants to enter, does the company have the first choice? Opportunities are always around the corner and may be hovering way above. Partners may see some potential on a certain product. Can the company first have the first option to be offered?
In the end, if discussion among partners leave some questions unanswered, it is better to postpone and rethink. The business can wait than start it with a wrong footing.