Taking on a business partner is a serious step. Regardless of the project type or business arrangement, you as a business owner should be very cautious that you understand WHY you are trusting your business reputation (and possibly your business health) to another individual. The old phrase "getting in bed with a stranger" is certainly appropriate for your consideration.
Family members, friends, old associates, and others that you have some sort of "tie" with are dangerous partners particularly because you will tend to let your guard down when you scrutinize the move to share your business. You may believe that all of these people can be trusted and that they would never do anything that you don't approve. Watch out!
Regardless of your partner's intent and innocence, you can't afford to take a chance on letting another human become the master of ship (i.e. your business).
So what should you do before you decide to take on a partner in business? Here is a short list of some of the questions you should be concerned with:
Can you see or request references regarding the partner's previous work experiences and results - especially for similar jobs or tasks that you plan to have him do?
Will you be able to work closely and harmoniously with this partner? Are there any issues that would cause you to not get along? Can you resolve differences or sticking points amicably and in a compromising way?
Will your new partner submit a concise proposal of exactly what he will accomplish (including a timetable and deliverables) by a certain date and for a certain amount of money?
Have you taken the time to analyze what having this partner will mean to your payroll or business budget? Can you really afford a partner? Will sharing a piece of your business mean that you make more or less than you do currently after paying for the expenses of having a partner?
Will you be able to design a business contract that you will both be able to sign pledging that you understand the partner relationship and exactly what is expected of each party?
Have you considered a trial period for your new partner? In other words, would you consider trying the partnership on a temporary basis for 1 month, 3 months, or 6 months to see how things develop instead of designing this as a long-term relationship from the very beginning?
Is there a way to structure the partnership so that no equity in the business is relinquished? I would call this a contractual relationship where you simply offered to pay for the partner's time and expenses but didn't give up any control in the business.
Have you considered the tax consequences of taking on a general or limited partner? What will it do for the structure of your business?
Have you incorporated an "out" or a way for you to dissolve the partnership if, for any reason, you decide that it just won't work to your advantage?
There are obviously good and not-so-good partnerships . . . and the idea is that you don't commit yourself to a losing deal before you have adequately planned for and considered what this partnership will mean to your business.
Don't rush to a conclusion or agree to a partnership prior to forming an intelligent opinion about how the partnership will move your business forward and pay for itself over and over again.
Think of your potential partnership in terms of the following equation: 1 + 1 = 3. You plus your partner are able to produce more profit for the business than each of you individually can do.
