When Love and Hate Collide — How to avoid choosing the wrong business partner
Investing in a business is a real venture, but sometimes the person you consider going into business with can be just as risky a venture.
At the same time, however, you’re not choosing your business partner by drawing their name from a hat, nor are they hiding under three cups labeled A, B, and C. Just like you can evaluate business risk, you should conduct a risk assessment of your potential business partner.
If you detect any of the five signs below in a person, then you should keep looking. Believe it or not, going into business isn’t always just about the money.
When you go into business, it’s important to know where you want the business to go. What direction do you want the business to take? More importantly, does your potential business partner want it to take the same one? Sure, you can have different ideas, but they must complement rather than contest each other. Otherwise, you’re setting the stage for boardroom battles, office bust-ups, and maybe even courtroom drama. None are good for business.
Remember, too, that investing in a business is a long-term activity. If you’re potential business partner looks like they’re the type to take the money and run, keep your checkbook closed. They’re not the one for you.
Lack of financial or business acumen
Check out your potential business partner’s track record. Have they started a business before? Did they do it somewhere receptive to business, such as the UAE or Qatar with their free trade zones, or a place with a tougher, less hospitable business environment?
How are they with the money? Do they buy stock that no one with an ounce of common sense would? Has entrepreneurship gone to their head, and they look like they might use the corporate credit card rather too much?
There are some people that the whole world seems to know. You’ve heard of the six degrees of separation theory, right? Well, businesspeople should be more two or three degrees of separation kind of people. In business, a person who doesn’t have contacts isn’t a person worth knowing. It also suggests they may not be good at interacting with others, which isn’t particularly good for business either.
Does your potential business partner have an inadequate personality for business? For instance, do they seem abrasive or ignorant in some way? If they do, they’ll rub their contemporaries up the wrong way — who could be further business partners. Remember that you have to work with them. Could you tolerate them?
Are they, on the other hand, too quiet? This is also a problem. People do try to impose themselves in business. Will this person resist if they do, or will they stand up for you both (not to mention your money)?
In business you’ve got to be a leader; leaders have to make tough decisions. The thing is that you’ve also got to be a listener. Get to know your potential business partner, and see how they broach other people’s suggestions or ideas. Do you get the impression that they’re dismissing them without even considering them?
If your potential business partner imposes their will on others regardless, they may do so on key decisions — and make the wrong ones at that. If your money is going into the business but you’re not going to have a say, save it for someone who genuinely cares.
Investing in a business is risky. You can never predict what’s going to happen. You can, however, determine who you go into business with. Certain characteristics or attributes in your potential business partner can indicate whether they’re the right one for you. If they don’t communicate the right way or can’t add up the numbers, the deal’s off. Sometimes the money just isn’t enough.
To catch up with the latest business news, you can visit Fortune magazine at http://money.cnn.com/magazines/fortune/.