Reader’s question:

“I need somebody to come into my business as a short or long term partner/associate to get the business into gear and drive it forward. I have been trying to get a suitable person, but as I’m unable to offer a salary, etc they are not interested. Also, as I do not have a financial history for this company, although I do have one for a previous business, prospective hands-on people are very difficult to find. What would you suggest?“

John replies:

A business partnership is in many ways like a marriage, it requires a high level of trust and not everyone will be a suitable partner. Just as in marriages, divorce is far too common; and business breakups are often just as unpleasant and expensive.

Equally like a marriage both partners must feel it is right for them, you’ll find some partners are motivated by money (we all have bills to pay), others will love the challenge and others will be passionate about your product. If you can’t afford to pay them you’ll need to find someone in the latter two groups and agree to remunerate them on based on the success of the business – either through commission or an equity stake. You can use the financial history of a previous business to demonstrate to them that you have the potential and know how to succeed.

My advice in finding a business partner, much like a life partner is to “date them first.” Find some form of business collaboration, such as jointly bidding for projects, engaging in cross-marketing efforts, or referring work to each other, or just work together for a trial period of a month or two. It’s a lot easier to find someone for these more limited risks than to find a full partner.

Collaborating in this way might make you more profitable, equally it might require more time than you can justify for the financial rewards, but since your ultimate goal is to find a business partner, you should consider it an investment in your businesses future. While you’re collaborating, you should be closely observing the behaviour of the person you’re working with, listen to their gripes, their passions and listen carefully for any tales of past legal or financial problems.

When you find a partner you are happy with make sure you put your agreement in writing and take suitable legal advice. A partnership needs to be based on trust, understanding and mutual goals for it to succeed and the exercise of putting together a legal agreement can ensure you truly understand each other and believe in the shared goals, not only that but if things go wrong you have a structure to deal with it.

Asking John:
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