How to Find a Business Partner That's Right for You

Before starting a business partnership, you’ll need to consider your potential partner’s values, communication style, risk tolerance and vision for success. As you work through how to pick a  business partner, though, you don’t have to be completely deterred by differences. Complementary differences and work if supported by mutual respect, trust and honest dialogue. Once you’ve made the choice, you can also protect the partnership by clearly defining roles, profit splits and exit strategies. A formal written agreement from the outset is best.

There is no question that starting a new business with another person is exciting and emotional. Hopefully, you have found someone who shares your vision and passion for an innovative product or service. As many entrepreneurs have learned the hard way, if you don’t get to know your co-founder and choose wisely, you may pay for it with significant time, stress and treasure later.

So what can you do in order to maintain the momentum as you launch your new business, while also spending at least some critical time upfront getting to know the person who may be your business spouse? My co-founder and I successfully started and have grown our law firm by adhering to these simple principles, and our experiences with clients have proven how important they are to mutual success. 

Here are six critical business partnership tips we think all business owners need to remember before finding their business partner. Plus, find advice on other aspects of partnerships you should know and how to formalize the arrangement. 

Find a Business Partner Using These 6 Tips

1. Align on Your Vision of Success

Running a business together largely means working towards a shared goal. Business partner compatibility matters—and being on the same page as to what that goal is before starting a business together is of utmost importance. 

What does success look like, and do you and your potential business partner view success the same? For some, success is a steady and manageable small business that pays reliable salaries. For others, success is an initial public offering (IPO) on the New York Stock Exchange.

Although it is impossible to predict success upfront, it is a good idea to at least talk about how you would feel about the possible outcomes and make sure you are aligned.

Even if you define success differently, that is not a deal-breaker for your partnership. It just means that at some point in the future, your roads may diverge. You can either have that be a stressful surprise later or an open conversation upfront.

What happens if your end goals don’t line up perfectly and you never discuss it? Here’s a potential scenario. You and your partner have been operating a healthy business for years and you receive a letter of intent from a major corporation—they want to buy you both out. You personally want to keep running the business because your vision for success was to help others through entrepreneurship. Your partner, however, wants to take the buyout because their vision for success was a major exit to fund their retirement. Now, the exit offer could completely derail your business partnership altogether. 

As you walk through how to choose a business partner, this is a critical area. Getting clear on what the end goal of your business is with any potential partner is a step that cannot be avoided. 

2. Evaluate Values, Personality, and Work Ethic

Actions and values are key as you are deciding how to find a business partner. Keep an eye on how your partner treats you and others in your orbit. Do they speak with you and others professionally and respectfully? What about underlings and service providers? Do they treat them fairly? Are they clear and patient? Do they cast blame on others if something goes wrong? It is easy for everyone to be on their best behavior when things are going smoothly, but how do they act when the pressure is on?

One thing is for sure: If they are not respectful and professional upfront, it will get worse later, especially if the business is successful and real money is involved. Now, maybe you are OK with this style and it doesn’t bother you (and maybe you even feel that it complements your own personality). But you need to make a very conscious decision upfront about the type of person you want to work with.

In addition, you need to make a decision upfront about the type of culture you want to create in your new business and whether you and your partner view the culture in the same way.

This is about more than just your feelings. Although you may be willing to tolerate your co-founder’s “idiosyncrasies,” other key players may not, and that may impact the overall success of the business.

3. Review and Match Your Communication Styles 

Are you a communication match? Does one of you need to talk things out while the other needs time alone to cool off when there’s a dispute? Can you have open dialogue between yourselves about your disagreements without those conversations becoming stressful or explosive? And how successful are you at reaching compromise?

If you and your co-founder are not a communication match, you are destined for some rough roads ahead. You do not need to agree on everything, that is for sure. But you do need an effective conflict resolution mechanism in order to exchange ideas without unnecessary drama and stress. And keep in mind that if the two bosses are screaming at each other, it will undermine your whole team.

4. Check Compatibility in Risk Tolerance

As an operator of a business, you will have many decisions to make that are a function of your risk tolerance.

Even if you are completely different in this category, it might benefit both of you, as the risk-taker pushes the team further and the conservative partner keeps the whole car from going over the cliff. That yin and yang can be a huge advantage, as long as you are a match in the other categories, especially communication and compromise.

5. Choose Someone with Relevant Industry Experience

While past experiences aren’t indicative of future success in a business venture, they are important. A potential business partner needs to have experience in the industry you are seeking to work in. Without that experience, you’ll spend ample amounts of time training your partner on the nuances of the industry—not working on growing the business. 

Another positive of finding someone with a relevant background is the greater possibility of increased lead generation. Someone who has worked in the same field as your business could have contracts that lead to quick sales, allowing you to scale faster. 

6. Trust Your Intuition When Making the Final Decision

As you are working through the process of how to pick a business partner, listen to your gut. If you cannot trust your partner, your relationship will fail.

Two people who are honest and have integrity can go far together, even if they are otherwise polar opposites.

On the flip side, a partner who lacks integrity or honesty is like having a hole in the boat—you will be destined to sink if you set sail with such a person, even if you get along on all other fronts. Know what the qualities of a good business partner are to you to help you make the decision. 

Be honest with yourself: Do you trust your potential partner? Do you have positive cues when you discuss business or does something always feel off? No matter how good someone may look on paper, it’s important to never disregard your intuition regarding trust. If you feel unsure about a person, take that as evidence you need to do further research. 

Important Considerations Before You Form a Partnership 

While picking the right partner is arguably one of the most important decisions when it comes to starting a partnership, there are other considerations you should pay attention to as well. Here are some common factors and steps you need to be aware of as you work on how to form a business partnership. 

Define Your Exit and Contingency Plan

Without an exit plan in place, business partners can be at a loss when it comes to making decisions that could affect the core of the business. Broadly speaking, an exit strategy is a shared idea of when, how and why a business venture will end.

A proper exit plan should answer at least four questions: 

• What might trigger an end to the partnership? (e.g. buyout, major disputes)
• How will the business be valued at the end of its life? 
• Which options for future ownership are acceptable?
• What post-partnership ties and restrictions (e.g. non-compete, non-solicitation clauses) need to be included, if any?

Agree on Profit Distribution and Decision-Making Power

One of the most important parts of a partnership is deciding on a profit-sharing structure. Generally speaking, in a partnership each partner is entitled to a share of the profits of the business. The ratio of profits each partner receives is critical to determine before starting any business, as this could break apart the partnership before the business scales. 

Even if you only have one partner with you in the business, that doesn’t mean you split the profits 50/50. Ask yourself these questions to get an idea of how profits should be split: 

• What are the capital contributions of each party to start the business?
• What are the day-to-day duties of each partner? Is one partner carrying a heavier workload than the others? 
• How much decision-making power does each partner have? 
• What is their level of expertise? What tangible skills do they bring to the partnership?

Put Everything in Writing: The Partnership Agreement

Despite the lack of money and the need for speed upfront, you should absolutely work with an experienced lawyer who can help you prepare a partnership agreement or comparable documents between you at the outset of the relationship. Entrepreneurs have a variety of reasons for not doing this (money typically being the key consideration). They say we will do it later, if we are successful.

Unfortunately, without agreements upfront, you will have no mechanisms to resolve a dispute later other than slugging it out, which is much more expensive than if you spent a little money on an agreement at the outset.

A well-drafted partnership agreement can also properly define the roles for each person, how the partners will deal with major disagreements, how much of the profits each partner is privy to and other key considerations. Putting your relationship to paper is an important step as it allows you and your partner to clarify your roles, dispute resolution methods, financial details and other key considerations. 

Find a Business Partner Who Sets You Up for Long-Term Success

Starting a business is an exciting venture. There’s nothing like making your own money and investing your own blood, sweat and tears into a product or service you love. But doing it with someone else can make the process even more fulfilling. That’s why knowing how to pick a business partner is so important. 

To start a partnership on the right foot, you need to find someone that is a good match. Remember to look out for shared values and vision for the business, a common agreement on how to properly communicate and an idea of how your risk tolerance levels compare. In addition, remember to trust your gut.

Feeling unsure of how you can find a business partner that suits you? Join SUCCESS+ for ongoing tools, insights and guidance. Find resources to help you create and strengthen business partnerships that will last a lifetime. 

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