While you might not consider your business partners to be your friends, you should have a relationship that mirrors friendship. Before you agree to join financial, professional and business forces with anyone else, be sure you ask these essential questions.
What’s Your Exit Strategy?
You hope everything will go according to plan with your new business and your new partners, but there should be a solid and well-thought out exit strategy in place in case things take a turn for the worst. Preparing for the worst well before it happens helps avoid misunderstandings, fallouts and possibly even litigation. This may be a tough question to ask your business partners, but it’s certainly a necessary one.
What’s Your Motivation?
Are your partners motivated by money, or by the possibility of becoming the best company in your industry? You don’t want to learn years from now that one of your partners wants to sell the business and has wanted to do so all along while you and everyone else is still invested in growth.
Do You Have Any Experience as a Business Partner?
Teaming up with business partners with experience can be a great professional relationship and an even better learning opportunity. If it’s everyone’s first time acting as a partner, it can still be a good learning experience, but it can also be an exhaustive experience fraught with expensive and critical mistakes. This isn’t to say you should only partner with those who have experience, just that everyone should go into the experience with both eyes open and their expectations well-managed.
What’s Your Definition of Success and Failure?
You and your partners should also be on the same page in regard to the overall success or failure of your business. The reason for this is because there might be certain changes everyone wants to make when the direction of the wind shifts. For instance, one of your partners might want to divert funds if he or she believes the business isn’t doing well. This decision might be at odds with you and other partners, which can lead to a multitude of problems that could have been avoided had you asked the above question.
How Big of a Priority Will This Business Be?
The reason this question is important is because it can help you gauge how much time and energy your partners are willing to invest in the company. The answer also shows you how committed the individuals or individual is to the business.
Screen your business partners with extreme caution. These people can either help build your business or be the ones to tear it down.