You have a great idea for a business, and you have found someone who is willing to join you in your venture. Perhaps your potential partner is someone you have known for years, someone you recently met at a conference or someone who saw your profile on a job networking site.
The two of you may share the same vision for the future of your business, and you are eager to get started. However, before you take any steps forward, you have some difficult questions to answer.
You may have heard that a business partnership is a lot like a marriage. If you team up with the wrong person, whether a spouse or a business partner, you may be in for years of struggle and the potential for financial ruin. This is why it is as wise to get to know your potential partner as it is to learn about your future spouse. While it may feel awkward or uncomfortable, taking these steps may help you avoid a business partnership that is doomed before it starts:
- Treat your future partner with the scrutiny you would use on a potential employee even if he or she is a lifelong friend.
- Run a credit check or ask your candidate to share a free credit report with you, and read it as if he or she were asking for a loan.
- Obtain credit information on your partner’s current business if there is one.
- Ask your potential partner for a list of people to whom you can reach out for references, and contact those people for information about past businesses or difficulties working with your potential partner.
- Use social media to see if your partner’s online presence raises any red flags that may jeopardize the image or success of your business.
- See if your potential partner is willing to submit to a personality test that you can compare with your own results to determine compatibility.
Of course, you should be willing to share any of this information with your potential partner in the name of full disclosure. If everything checks out and you both feel comfortable starting a business together, you will want to draft a solid and comprehensive partnership agreement that covers as many contingencies as you can, including a mutually agreeable exit strategy. For guidance in building your partnership, protecting your business and resolving disputes, you can reach out to a skilled California business law attorney.