- Why start a business with a partner?
- Why is it so important to find the right partner?
- How do you find the perfect business partner?
Q: How do you find a business partner?
A: Start by checking your work environment to find any like-minded individuals. Next, consider using specialized apps centered around entrepreneurship. Consider your personal network, and prioritize individuals with the necessary startup capital to help get your business off the ground. Working with a partner has many advantages, allowing you to split costs, liabilities, and responsibilities.
Partnerships offer all kinds of unique benefits – but only if you choose the right partner.
If you’re wondering how to find a business partner, this might be the most important decision in your entire entrepreneurial career.
The best partners will help you achieve more while raising your startup capital and sharing liabilities. By working with others, you can turn your new business into a thriving enterprise much faster than if you were operating alone.
According to the latest statistics, more than 80% of partnerships fail. This means that if you want to have any chance of success, you need to think long and hard about who you want to work with.
Make a smart choice, and you could be within that top 20%. Choose poorly, and you’ll be among the majority of partnerships that never taste success.
So what’s the best way to figure out how to find a good business partner?
- Why Start a Business with a Partner?
- Why Is It So Important to Find the Right Partner?
- How Do You Find the Perfect Business Partner?
Why Start a Business with a Partner?
First of all, let’s review the advantages of starting a business with one or more partners:
Even if you think of yourself as a veritable “Jack of all trades,” you can’t do everything perfectly.
A partnership allows you to work with people who have unique skills that you might be missing out on. This allows you to bridge knowledge gaps, creating a more well-rounded business.
For example, a scientist with an incredible invention might partner with an advertising expert to sell the product, taking it from the drawing board to the marketplace.
Easy to Set Up
A partnership is less formal compared to an LLC or a corporation, which means that there are fewer legal obligations.
In addition, a partnership is easy to set up, and you don’t always need to register your business formally to operate legally. That being said, a formal partnership agreement is usually a good idea.
Working with others means less work for each partner. By sharing the burden of running a business, you can each strive for better work-life balance.
It’s also easier to avoid burnout when you’re in a partnership, and there is often a sense of camaraderie among partners that is difficult to replicate elsewhere. Extroverts may be especially drawn to partnerships, and this business type can offer unique emotional support.
Unlike sole proprietorships, partnerships benefit from many different points of view. This can help partners make more effective decisions, as one partner might notice an overlooked detail or a hidden opportunity.
While agreeing on the best move isn’t always easy, partnerships benefit from the old adage: “two heads are better than one.”
More partners means more startup capital, plain and simple. And when you’re trying to get a business off the ground, every cent counts.
If you’re worried about going into debt to make your dream business a reality, a partnership can alleviate some of these concerns while injecting your venture with a new source of cash.
A partnership is much more private when compared to an LLC or a corporation. Instead of being forced to publicly reveal financial information, a partnership can operate completely under the radar for the most part.
This might be an important priority for many entrepreneurs – especially when starting a new business.
Growing your partnership can be as easy as adding a new partner.
For example, a law firm could simply add a new lawyer to its business, generating more income in the process, and accessing an entirely new set of potential clients.
Incentives for Employees
In addition, partnerships allow you to create strong incentives for employees.
High-performing workers can be rewarded with partnership status, cultivating a work environment with a strong work ethic as employees feel inspired to reach for the highest possible levels of success.
A partnership also offers unique tax benefits. This all depends on your accounting and the structure of your business, but profits are generally taxed just once.
In contrast, running a corporation may subject you to “double taxation.” You can also deduct considerable business expenses to lower your tax obligations even further.
With all that said, you should also be aware of the potential disadvantages of partnerships. For example, you will have to share liabilities with your partners. In addition, the loss of control may be difficult to deal with for some people.
Why Is It So Important to Find the Right Partner?
If you find the right partner, you can avoid the potential disadvantages of your new partnership while enjoying its full range of the benefits.
This is an important consideration when trying to figure out how to find a business partner.
It’s important to stress that partnerships are built on trust.
Your new business partner will have complete access to the business’ finances. They will also have the authority to make important decisions about the business, and at times, they will make these decisions without your input.
When you’re working with a responsible, hard-working partner, these concerns do not cause any issues. In fact, they make your business stronger.
While you’re busy working on another project, your partner can take it upon themselves to pay taxes, purchase new supplies, and carry out other important tasks that you don’t have time to handle.
But if you don’t trust your partner, you’ll constantly worry about what they’re doing behind your back.
Are they stealing money from the business? Are they overpaying for essential supplies? Are they signing contracts that clearly do not benefit the business?
All of these worrying thoughts and many others will be running through your mind unless you feel confident about your partner’s ability to act independently.
Picking the right partner also helps you maximize other inherent advantages of this business type, such as an increase in startup capital.
Let’s say you choose a business partner without any cash to contribute. If they’re not contributing meaningfully to other areas, such as additional skills or a strong work ethic, then it might not be worth the effort.
After all, you could simply establish a sole proprietorship and hire this individual as an employee if you’re the one taking all the risk and contributing all of the startup capital.
In this situation, you might need to stop asking yourself: “How to find a business partner,” and instead consider whether you even need one in the first place.
The same logic applies to a partner who is incapable of doing their fair share of work. If you find yourself taking on 90% of the duties for your new business, then what’s the point of having a partner?
You want someone who is willing to work hard. If you have one partner, that means 50% of all business-related duties. If you have three partners, that means 33% of the duties, and so on.
If you’re working with someone who has poor work ethic, you might as well create a sole proprietorship or an LLC. Under this business structure, you would at least have the option to fire the individual if they weren’t working hard enough.
But this raises another important point.
Choosing the wrong partner can cause major headaches in the future because of the partnership agreement. Kicking someone out of the partnership can be very difficult indeed, as this is typically a formal, legally enforceable document.
In fact, you may need to dissolve your business entirely if you want to get rid of a partner. As bad as it sounds, this might be the only choice if your partner is seriously dragging your business down.
This is why it’s so important to choose carefully when trying to figure out how to find a business partner.
How Do You Find the Perfect Business Partner?
So… what’s the best way to figure out how to find a business partner?
Well, you can start by using your common sense.
Consider everyone you already know, and think about whether any of them could be a viable business partner.
This might be a friend, a family member, or someone from your work environment.
Work colleagues often make great partners for a number of reasons:
- You can get a sense of their work ethic
- You can experience their communication skills
- You can see how they work in teams
- You can assess their skills
- You can form a friendship before starting your partnership
In fact, there are many employees who have left their jobs to start their own businesses over the years, and this became increasingly common during the Covid-19 era.
But this has been happening for decades – long before the pandemic.
Just consider the story of Bernie Marcus and Arthur Blank – the two men who started the incredibly successful Home Depot franchise. Before this success, they were both working together at a home hardware store called Handy Dan.
When Marcus and Blank were fired at the same time, they decided to partner up and create their own home improvement store – one that was even better than their former employer.
In less than a decade, they managed to open more than 100 stores, raking in over $2.7 billion in sales over this period. In contrast, Handy Dan went bankrupt by the late 80s.
So whether you’re working at a hardware store or an office, it makes sense to consider which of your fellow employees might be the best fit when figuring out how to find a business partner.
Work colleagues also make good partners because they’re not too close to your inner circle.
The old saying is true: It’s best not to mix business and friendship.
Why? Because if your partnership fails, your friendship might never recover. The same logic applies to family members. If you’re wondering how to find a business partner for a startup, it might be worth looking outside your group of family and friends.
Remember, 80% of partnerships fail. Is it worth taking that risk with your friendship?
In addition, you might not feel comfortable confronting your friend or family member about business concerns. In contrast, it can be easier to tell a work colleague that they need to get their act together and do their fair share.
A positive approach might be to sit down with a potential partner and tell them about your business plan. Don’t reveal that you want them to be your business partner right away, but gauge their reaction when they hear about the overall idea.
Do they seem interested? Inspired? Motivated? Encouraging?
If you get a positive response, it’s time to hit them with the big question:
Are they interested in starting a business with you?
If they seem bored or uninterested when you explain your idea, it might be best to simply end the conversation there. You can always say something like: “It’s just an idea.”
Ideally, you should work with someone who’s just as passionate about your business plan as you.
That being said, passion is really only one part of the equation. The best partner for your business depends on the unique skills needed to grow your enterprise.
For example, perhaps you have an amazing product that you’d like to sell online, but you have no idea how to succeed in the eCommerce world.
Your work colleague might be extremely passionate about the project, but does he have the necessary skills to guide your business towards success?
On the other hand, you might have met someone through a networking event who has considerable expertise in the world of eCommerce. Even though this individual might be less passionate about the project compared to your work colleague, they might be the best fit.
Or perhaps your business is in desperate need of startup capital. Do you choose someone with a lot of cash to contribute, or a friend who has almost nothing to their name?
You might be specifically wondering how to find a business partner investor. If you’re simply looking for investors, you might consider making them a silent or limited partner instead of a general partner.
Ultimately, the best partner depends entirely on the unique priorities and requirements of your business.
If you’re wondering how to find a business partner, you will need to assess your business and determine what kind of partner your venture needs as opposed to the type of partner you want.
But in the world of social distancing and remote work, it can be difficult to track down potential business partners. With so many solopreneurs working from home over the web, it’s sometimes impossible to meet anyone – let alone a business partner.
Fortunately, there are a number of apps and websites designed specifically to help business partners connect. This is great news if you’re trying to figure out how to find a business partner online.
One example is CoFoundersLab, an online entrepreneur network that helps like-minded individuals connect and start new businesses. Another example is cofoundme.org, and many entrepreneurs have also experienced success with TechCoFounder.
However, before you start exploring these sites, you’ll need to create a solid partnership business plan that attracts plenty of potential partners.
Don’t make the mistake of searching for partners with a half-baked idea of what you want to achieve.
Before you get started with online entrepreneur networks, you should also clearly define what you’re looking for in a potential partner.
Write down a list of all the various skills you need in your new business, along with general personality traits, work experience, and anything else you think is relevant.
LinkedIn is another solid choice if you’re looking for a potential partner. This business-focused social media platform provides you with plenty of options, allowing you to find like-minded individuals close by.
Better yet, each LinkedIn profile gives you a sense of a person’s skills, work experience, and general philosophy towards entrepreneurship.
Another option is to check out reddit, including subreddits like r/cofounder or r/entrepreneur. It might seem a little unprofessional at first, but you’ll quickly learn that this is a vibrant online community with plenty to offer.
These redditors also take themselves very seriously, and they may also be trying to figure out how to find a business partner.
In fact, some entrepreneurs have also been successful in finding a good business partner on Craigslist.
Finally, you might also consider past classmates from university or even high school. Some of these individuals may have made a lasting impression on you – if not for their personalities, then for their academic abilities.
It’s relatively easy to reconnect with these past classmates, and doing so could lead to a number of new opportunities.
When you do identify a potential partner, don’t rush things.
Instead, take things slow and gradually bring them into the fold.
Start with an interview or a meeting to learn more about them. This is especially important if you connected with them online.
If the interview goes well, you might be tempted to immediately make them a partner. But that might not be the best idea. It’s often better to bring them into your business for a few months during a “trial period.”
From there, you can make them a full partner once you’re absolutely sure they’re the right fit.
If you’re looking to entice potential partners for your business, particularly an online venture with a focus on remote work, you should consider additional services.
For example, Alliance Virtual Offices provides virtual addresses, allowing you to associate your partnership with a prestigious office building in a big city like New York or San Francisco.
This virtual address service also comes with mail forwarding, allowing each partner to receive important business-related mail.
Alliance Virtual Offices also offers a Live Receptionist service, allowing you to take calls professionally while maximizing customer service and cutting down on needless costs.
Partnerships offer many important advantages, but you won’t experience any of them if you choose the wrong partners.
If you’re wondering how to find a business partner, you need to think very carefully about your next move.
This is one of the first and most important steps when forming a partnership, and you should do everything in your power to create the best possible team.
Whether you have one, two, or even five partners, each one should bring something of value to the business.
In this day and age, you can’t afford to have any dead weight.
In the end, you’re looking for a unique blend of many important qualities, including passion, work ethic, and skill. And of course, it doesn’t hurt if your new partner is bringing plenty of startup cash to the table.
If you’re ready to start a partnership, then there’s only one thing left to do:
Start looking for partners today using the tips and tricks you’ve learned, and whatever you do, don’t give up on your business.
A partnership certainly comes with its own set of challenges, but the rewards can be immense.