Tips for Pre-Agreement Screening of a Potential Business Partner

Tips for Pre-Agreement Screening of a Potential Business Partner

Choosing business partners isn’t as easy as asking them about their bank balance and education. You need to fully vet anyone who comes into business with you. Here are some questions you can ask to make sure you need and want a business partner, their goals and ideas about joining you and if you can come together to move forward with a plan:

• What do you need in a business partner?  Think about personalities, connections in the industry or money. Someone who is similar to you might be more comfortable, but you really want someone who complements your skills.

• What is your potential business partner’s situation?

Think financially and personally. Your business partner’s financial commitments will shape their decisions. If a business partner is dealing with a new baby, an aging parent or other time commitment, it could make it difficult for him or her to fully commit to the business.

• How does your potential business partner handle difficult situations?

Past behavior is indicative of today’s character. What happens when you can’t make payroll? Have they ever skipped payroll taxes?

• Are they ready to put everything in writing and work with an attorney?

Don’t cement a partnership with a handshake. You need a contract with consequences when expectations aren’t met. You don’t want to destroy the business just to get rid of a partner that didn’t work out.

• Do you really want/need a partner?

Maybe you just need an employee to help you in the business. You maintain control while having someone who works hard. Consider all your options before taking on a partner.

You should also be getting these same kind of questions about yourself from potential business partners. If they aren’t vetting you, they might not be fully engaged in the business. You should expect tough questions from your business partners.

Smart Capital Lending has financing options for small businesses to find success. Ask our financial specialists for more information.

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