Most, if not all business relationships are formed amongst friends or even worst, spouses or family.
Why do these ventures go sour so quickly?
Entrepeneurs lose sight of the fact that the characteristics of a good and loyal friend differ substantially from what is required in a successful business relationship.
When the initial relationship breaks down first
Deterioration of the initial relationship, like with a divorce, will almost always lead to the deterioration of the business relationship and vice versa. In most instances, this deterioration will also end in litigation.
How to identify a suitable business partner
Identifying the most suitable business partner is key to the future success of any business, irrespective of which ownership structure you choose or the effectiveness of your corporate governance structure, memorandum of incorporation, or commercial agreement.
Potential entrepreneurs should conduct due diligence on their potential “partners” to establish whether any collaboration between them will culminate in a successful business relationship, or end in tragedy.
What characteristics should you look for in your business partner?
The required characteristics of a business partner may vary from person to person and from industry sector to sector, which complicates the compilation of a definitive and comprehensive list of these traits. We have identified some generally accepted qualities you should expect of a potential business partner.
In our opinion, all business partners should first and foremost be able to collaborate with a minimal amount of conflict. Personal incompatibility between business partners will destroy any hopes of achieving any synergy among the “partners” notwithstanding the fact that each of them may possess the traits listed below.
All potential business “partners” should at least check the following boxes:
- Share your passion for the products or services you intend to deliver and not necessarily material gain
- Be open and direct about his/her opinions, feedback, etc.
- Possess the required industry knowledge and experience
- Have the required licenses, concessions, or be otherwise compliant with industry requirements eg registration at PSIRA when competing in the Private Security Industry
- Have a strong work ethic, be reliable and honest in his/her dealing with you and clients/customers
- Share your level of work stamina or willingness to work long hours
- Possess diversified business skills
- Be willing to subject himself/herself to existing policies, practises and decisions
- Share your appetite for growth
