5 Questions All Entrepreneurs Should Ask Themselves Before Entering Into a Partnership By Mike Kappel

Most business partnerships start with business minded friends blossoming into something more.
But entering into a partnership can be a lot like marriage. And when you get married, you don’t
just marry the other person, you marry their
family, their lifestyles, and their finances.
You may not notice the family, lifestyles, and
finances during the honeymoon phase, nor when
your great ideas are propelling you forward at a
blinding pace, but they’re there. And, they always
will be, for better or for worse.
If you’re thinking of chasing your business dream
by means of a partnership agreement, here is a
list of important questions you should ask
yourself first:



1. What are your strengths and
weaknesses?
Know thyself!
When I first started out, I suspected I would be
an introvert. I had all the tell-tale markings: shy,
quiet, went to college to be an engineer. Then I
joined a frat! Four years of college later, I had
blossomed into a risk-taking go-getter who
thrived on pitching my crazy business ideas. I
talked my close friend into entering into a
partnership with me, and the fit couldn’t have
been better, even though I hadn’t planned it. He
was a reserved, analytical, and detail-oriented
man with a mind for software coding and
operations.
One of the best reasons to form a business
partnership is so you can find someone with the
skills you lack. This also extends to personality
traits and management styles. One person can’t
be everything. That doesn’t mean you should
partner with someone who is your opposite. You
need to get along, but you also need to know
why you’re a good fit. Answering that question
starts with a look inward. What are your
weaknesses, faults, and technical shortcomings?
How will a business partner help you manage
them? How patient will they be with you, and you
with them?

2. Where does your partner stand
financially?
This sounds like a standard and prudent business
question, but it’s not. It’s a very personal
question that will reveal a lot about the person
you want to partner with. In fact, how it’s
answered may dissolve your budding partnership
—which highlights just how crucial it is to know
their financial standing.
As I stated above, you’re not just partnering with
a set of skills, or a personality you like and feel
comfortable working with. You are partnering
with all the personal stuff that a potential
partner may bring to the table. This means that
debts, loans, investments of a personal or
business nature—all could impact you. If you
need your partner present and focused to help
you run a business, you need to know what kind
of financial implications could steal that partner
away.
Remember, if you’re starting a new business,
many startups run without any profit for the first
few years. Can your potential partner handle
that? What kind of window do they have
financially to chase this dream? Just as an
investor does due diligence for a business that is
seeking funds, you must evaluate, with great
scrutiny, the personal and financial components
of a potential partner.

3. What are the potential partner’s
expectations about the time
involved?
I was advised to do a little pre-marriage
counseling before I got hitched. Now I advise
couples and business partners to do the same.
Why? Because, in both situations, the people
entering into these partnerships often have
preconceived expectations for how the other is
supposed to behave.
Ask yourself, what do you envision your role
being, and what do you envision your partner’s
role being? Then ask him or her the same thing.
Do those visions match up? Even a term as
seemingly transparent as “commitment” can
mean very different things between parties.
For example, your idea of commitment may be
being on call 24/7 for every possible business
need. Your partner may feel that starting the
business means they can have more freedom
and work-life balance. Maybe you want world
domination, and they want the freedom to do
creative projects that may or may not add to
your bottom line. Talking about this upfront can
save you a lot of strife later.

4. How does your potential partner handle pressure?
This is an important question. Maybe you’ve had
to answer this question during a job interview of
your own? If you gave a rehearsed answer and
didn’t understand how enlightening this question
is designed to be, you will understand when the
person answering the question is responsible for
at least half of your company.
The question is designed to bring to light how
your partner handles stress. Did a pressure
situation prompt them to take an easy way out?
Or, did they push something crucial to the back
burner? Beyond transparency and emotional
control, how a person handles pressure can tell
you how they prioritize business functions or
assess risk.

5. Will they put their money where
their mouth is?
If you were merging your company with another
company, would you do it without getting
anything in writing?
In many ways, a partnership agreement is like a
tiny company merger. You are agreeing to take
two “operations” that are used to working
independently—that may even appreciate one
another because of that independence—and
you’re merging them together, with the
expressed understanding they will sacrifice that
for the good of the new, singular company. If
your partner is fully on board with you, there
should be no issue with getting him or her to
commit to writing down all the parameters of
their expected work duties in a legally binding
contract.
This contract should dictate what to do if there
are emergencies, business complications, or if
you or your partner are not performing at the
level promised. The contract represents a mutual
commitment to one another, and clearly outlines
the consequences if that commitment is not
upheld.

6. Do you REALLY need a partner?
I don’t know many partnerships that have lasted
over the long haul. Mostly because expectations
weren’t the same or priorities changed over
time. It’s not a bad idea to have an exit strategy
built into your partnership conversation early on.
If you think about it, very few people stay at the
same job for their entire lives. Even as an
entrepreneur who has started a successful
company, I’ve had the need to grow and start
other companies.

What is a partnership going to offer your
company that you couldn’t do on your own?

Really take some time to think about what’s
causing you to start your company. Is it a
restless need to be your own boss and see your
own ideas come to life? If it is and you’re taking
on a partner simply as a safety blanket, at some
point you may find you don’t need that blanket
anymore—but you can’t just discard it. Analyzing
different types of business structures before
jumping into a partnership can save you a major
headache down the road.
However, if you know who you are, what you
want, what you expect from your partner—and
are okay with the partnership ending if clear
business goals aren’t met—then more power to
you. Entering into a partnership can be a
beautiful thing when done right.