There are two definitions to a ‘business partnership’ that are relevant to this article. The first is the legal definition which refers to the business structure, which can be Ordinary Partnerships, Limited Partnerships or Limited Liability Partnerships. The choice you make here determines how you report to HMRC and manage your taxation accounts, and how profits are shared, for example.
The second definition and the one we are going to focus on in this article, is much more straightforward, but just as important to have a handle on – who is the right person to choose to go into business with?
According to gov.uk ‘In a partnership, you and your partner (or partners) personally share responsibility for your business. This includes: any losses your business makes, bills for things you buy for your business, like stock or equipment. A partner does not have to be an actual person. For example, a limited company can count as a ‘legal person’ and can also be a partner.’ Business Partnerships
So, if your sharing responsibility over everything, you need to be sure you’re making the right choice.
6 Qualities to look for in a good business partnership
You likely have an idea of who you would like to work with already. Perhaps you have identified a shared set of values or likeminded goals. However, there are qualities to consider beyond having the same ideas…
1. Skill set
It might seem like a good idea to choose a business partner who has the same skills as you. After all, you can support each other and understand each other’s way of thinking. However, I would advise choosing someone who possesses skills which you do not. This way your partnership will be more well-rounded. Don’t feel threatened by a superior skill-set, bring them in and keep them close so they become the skills your partnership possesses.
This is essential in any partnership. Do you feel they have the same work ethic as you? Can you count on them when the time comes? As Oprah Winfrey once said, ‘Lots of people want to ride in the limo with you, but what you want is someone to take the bus with you when the limo breaks down.’
Are you on the same wavelength? Do you know what’s about to be questioned before the other person brings it up? Perhaps your personalities differ, and you both need to learn about how the other communicates and what they need to feel happy and fulfilled. It might be a good idea to do personality tests such as DiSC to learn more about effective communication.
Arguably, you may not be looking for this quality in a good business partner, because a lot of the time you’ll be looking for things you can’t learn, like work ethic and personality. However, if your chosen business partner does have the experience, then all the better.
5. Able to bring in new business
Now this is where experience would pay off. If your chosen business partner is good at networking, good at prospecting and good at converting leads, then your business is bound to be a success.
6. Financially reliable
All too often, businesses fail due to funding issues. How a person manages their own finances can be a good indicator of how they would manage a business’ finances as well, and if they have a lot of difficulty, they are unlikely to be able to contribute financially when it’s needed.
Are you ready to form a partnership?
It’s worth bearing in mind that when partnerships fail, it could be because there is a mismatch in any one of these qualities, and I’m sure there are other qualities I haven’t included. Not every partnership is perfect from the very beginning, and it is likely that you will have to work at it to remain successful business partners.
Sometimes you can manage this between yourselves, and at other times you may need a professional to come in and work with you on keeping those bonds strong.
If you’re in the position to bring a partner into your business, or you need a mentor and business coach to help you through a period of change or difficulty, then let’s have a conversation.
In the next blog, I’ll be talking about the legal and financial side of business partnership and what you need to know when you set one up.