A business partnership is like a marriage.
For this reason, it’s absolutely necessary to not only be very picky when choosing a business partner, but to also know what types of “partners” to avoid in general.
Here are 3 types of partners who will kill your company:
The 6 Degrees of Separation Partner (a.k.a. the Kevin Bacon Partner)
While seeking referrals is a smart way to find potential partners (or any team member for that matter), don’t bring in someone simply because they know someone you know.
Yes, it can be tricky if the person you know is making a direct recommendation. So, keep the fact that it’s your business – your livelihood – on the line and you’ll find a diplomatic way to manage the situation.
The Ryan Leaf Partner
Ryan Leaf had a successful college football career playing for the Washington State University. He was even a contender for the Heisman Trophy. As a result he was selected as the second pick overall pick in the 1998 NFL draft.
In other words, he had a lot of potential.
Today, he’s remembered as the #1 DRAFT BUST of all time.
Rotten behavior, poor performance and injuries were what he brought to the NFL and he is a good example of why the past is no indication of future success.
So, how do you avoid making a Ryan Leaf move when selecting a business partner?
Simple. Take your time.
Observing people over time is the only way to see if they’re consistent and set up situations where you can see them in action.
THE BFF Partner
Your lifelong best friend may be a perfect partner for you. But don’t assume that to be the case simply because your friendship works.
Business is strife with conflict and pressure and, as partners, you’ll have significant expectations of each other.
If you truly your BFF is the right person, agree to a few trial projects and see how the two of you work together.
I’m sorry to say that at Wagonheim Law, we have earned considerable fees extricating clients from “bad marriage” business partnerships. Of course, many owners avoid all three of the above partnership killers and still end up in a failing partnership.
What’s the solution? The Business Prenuptial
Before you enter a partnership, draw up a business pre-nup that includes an employment agreement, stockholder agreement and operating agreement (we’d happy to assist you with this). Taking this step may not only prevent your partnership from turning sour, but will also help you and your partner decrease emotional and/or prevent financial harm should either of you seek a divorce.