Four Science-Backed Steps To Choosing The Best Startup Partner
Having a business partner can make or break your operation; use these tips to ensure you find the right one.
When it comes to starting and growing a business, the employees whom you hire are some of the most important factors. Hiring great employees can be a massive boost to your startup's fortunes. That naturally leads to the question of the persons with whom you'll be making hiring decisions, as well as all the other important decisions involved in growing your business.
Aren't those people even more important? Yes, they are, which is why you must choose partners carefully to make sure your startup is primed for success on every front. Too often though, entrepreneurs choose partners solely based on friendship or convenience. That could lead to bad consequences ranging from outright discord, to a dearth of innovative ideas, as outlined in a Harvard Business Review article. Ultimately, you should be looking to get the best partner you can get for your startup, and here are a few factors you should consider on how to do just that:
Do you need a partner?
First, you'll have to decide if your business actually needs an extra person in management, or if what you need is to hire staff or consultants. Giving someone a share of your business because you can't afford to hire them might seem convenient, but it's rarely ideal. What you need is someone who complements your capacities and brings the missing parts of to the table.
If you need staff, you could explore hiring freelancers before you're able to get full-time staff. Freelancers generally cost much less, and you'll also be benefiting from the ability to access a wider pool of talent. You might even be getting higher quality work. It's unlikely you'll need to services of a consultant very early in your business, but if you do due to being in a technical industry for instance, you can try to find one who'll agree to work on a contingency basis, or one who'll accept payment in instalments. It won't be easy, but if your business model is compelling and you reach out to enough people, you'll get a taker eventually.
Prioritize skills over experience or pedigree
When you're looking to partner up with someone, it's easy to get caught up in looking at LinkedIn profiles and going for the person who seems to have gone to the most prestigious school or to have the most impressive resume. That's not the way to go, since you're looking for someone with whom you can grow your business from scratch, and not a consultant to come in and fix things in a jiffy.
"Nowadays, having the right set of skills is more important than formal experience. In the initial stages of your business, you'll probably have to do quite a lot of the work yourselves, since you won't be able to hire all the staff you need immediately," says Christopher C. Lee, CEO of Photomochi. "In order to be able to maximize that, it'd be better if you partner with someone who understands all the aspects of your business and can actually contribute to the development of your product, provide stellar customer service or handle other parts of your business model directly."
Look for values alignment
Another very important thing when it comes to choosing your partners is that your values must align. Regardless of how innovative your partner is, or how much skills he or she brings to the table, there'll be a problem soon if you don't have the same set of values. When you have to make decisions regarding the direction in which to take your business, it'd be crucial to have the same set of priorities, as researchers from Dutch universities found in a study.
One common mistake people make in this area is believing that friendship is an automatic pointer to value alignment. It isn't– you can have friends with whom you have significant differences regarding your values. Unlike a friendship where you can compartmentalize and agree to disagree on certain topics, you'll have equal stake with your business partners and will have to resolve issues one way or another. Constant disagreement will amount to unnecessary time wasted and will likely fray your working relationship beyond repair, eventually.
Execute an agreement
If you're partnering with someone whom you know quite well, it's easy to come to the conclusion that you don't need to have an agreement upfront. First, you might not be certain what the terms should be and you might feel it's better to avoid the awkwardness and continue to operate in an ad-hoc, flexible manner. Nothing could be further from the truth.
Money is one of the most common causes of business discord, and the earlier you can put issues regarding how to share profit behind you, the better. You'll be able to focus on maximizing revenue without having to come up with a fresh sharing formula again and again, especially when you're exiting.
According to Brian Ofsie, CEO of Delancey Street, "Apart from money, a written agreement is also crucial for sharing responsibilities and being clear as to whose role it is to handle what. It's true that in the initial stages, you'll probably be wearing multiple caps, but it should only be till you don't need to. A written agreement will ensure everyone is putting their maximum efforts into their core areas of responsibility, maximizing their skills and bringing in the best ROI possible."