Tips on choosing a business partner

Choosing a business partner can be as important as choosing a spouse. You’ll likely spend more daylight hours with a business partner than with your spouse so deciding to go into business with someone should be a very careful decision.

Selecting the wrong partner can mean lost time and money and a damaged or ruined relationship. It can also kill a business and leave legal consequences for the owners.

So how do you pick a partner? Begin by making sure that you have similar ethics and goals. Don’t assume that you agree on how to handle tough issues. Explore various scenarios and discuss how you each would handle things. Think more about what you’ll need to do if the business encounters problems than how you’ll deal with success.

Write an operating agreement. That’s a statement of the responsibilities each partner will handle, what you’ll bring to the company, how you’ll split profi t and losses, how much time each of you expects to contribute, how you’ll handle disagreements and what happens if one of you dies or otherwise wants or needs to leave the business. When discord occurs, the two of you can say, “Let’s see what we wrote in our operating agreement about that topic.” Discussing problems before they occur will help to prevent blowups.

Understand the personality and strengths and weaknesses of your potential partner. Usually this means knowing the individual for a long time so you know what might cause a bad mood or disagreement. You will also comprehend how you’ll mesh in the business environment and what each of you will contribute to the success of the operations. A quick decision to start an enterprise together is often a bad choice. The time needed to be sure you’re on the same wavelength is time well spent.

Opening a business with a family member can be a wonderful experience or a terrible mistake. A failed business can lead to very uncomfortable family gatherings and years of distress. Clearly stated expectations and excellent communication are keys to success.

The business consultants at the Louisiana Small Business Development Center at McNeese State University are ready to talk with you about picking your partner in entrepreneurship. Call 337-475-5529 to schedule an appointment with an experienced professional for no-cost assistance. For over 30 years, the LSBDC at McNeese has worked with entrepreneurs and business owners who are looking to start or grow their small business. Visit www.lsbdc.org/msu to learn more about us.

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DONNA LITTLE is the director of the Louisiana Small Business Development Center at McNeese State University. Contact her at 475-5945 or dlittle@lsbdc.org.

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Funded in part through a Cooperative Agreement with the U.S. Small Business Administration and Louisiana Department of Economic Development. All opinions, conclusions or recommendations expressed are those of the author and do not necessarily refl ect the views of the SBA.