Discussion on:

Answer these five questions before choosing a business partner

I was fascinated by the parallels in the examples to my law partnership of years back. All of these cautions apply equally well to all partnerships. I had a good one some years back where another lawyer and I worked together on some cases and then formed a partnership. Our skills dovetailed neatly, I was better at "shmoozing" clients and getting business, my partner was a detail man with excellent courtroom skills.

It all started to come apart when each of us became involved in love affairsand the wives didn't see eye-to-eye on many matters, primarily financial. We broke up when my partner withheld a significant client from the partnership which had been brought to our attention by his wife, who pressured him to not share according toour unwritten agreement.

There were several errors I made, and the moral of this story is you can't think of everything. So regretfully, you must keep your personal options open.

To me, the most important thing about finding and deciding to use a partner or subcontractor is determining the value proposition for both parties.

Are your skills complementary? Do they fill a gap that is needed? Will the increased capacity help sell larger, more profitable projects? Do they have high quality people that would be good to have on staff, but would be too difficult or expensive to hire outright? Does the partnership add value to your for you, the partner, and your clients?
Section 2 discussed roles. It is possible that you may partner with a company that is larger than yours for a project. It is important to clearly define hierarchy and reporting structures. If there is a disagreement you need to know who makes the final decision. You also need to be reasonably sure that the partner is capable of taking direction and constructive criticism. It is no fun to work with someone who you constantly have to argue every point with. Finally, you need to make it clear who owns the project. A good subcontractor agreement that includes non-compete language is invaluable.

Section 4 discussed business vision. In addition, you need to find a partner who is honest and has integrity. There is nothing more frustrating and dangerous than a partner who is dishonest. A bad partner can cost you customers, business, and possibly your reputation.

Something that was omitted was YOUR company finances. How is your payment schedule structured? Do they guarantee their work? Can you afford to pay them? We make our subcontractors deliver work products that are consistent with the quality of our work, and we make this clear to them before they start. If the quality is not what we expected then they do rework for free. To reward them for this additional burden / risk, we pay our subcontractors before we receive payment from our clients.

One major point, in fact, in my opinion the most important point has been left out - do you TRUST your business partner(s)??

I know from personal experience that having complementary skills, having known someone for a length of time etc is not enough - having being stung before. In my view the primary consideration should be that of trust between you and your business partners. Without trust, no small business venture can succeed.

Thanks, I needed this one. I really appreciate it.
Thanks/-
Jason Webb
entreper