How To Choose Your Business Partner

Choosing the right collaborator is more than half the battle when forming a business partnership. Dick Langan, Partner at Nixon Peabody LLP shares what you need to know before partnering up.

What You Should Consider
Complementing Strengths
Given the foundation of a successful collaboration is about fit, it is critical you find a partner with complementing strengths. In particular, if you were to expand in the U.S. as a Swedish company, you would want a U.S. business partner that has an equally distinguished reputation, quality of experience and expertise. Granted, no two companies are created equal, so take extra caution in considering the qualities you want or need in a partner, and how both companies can complement each other.

Shared Vision
Like any form of alliance, it is important to have a common goal. If your strategy, vision and objectives are aligned with your partner’s, together you will be able to withstand many of the challenges that come your way. Inevitably, there will be questions when it comes to how both of you handle the day-to-day routine or significant moments with major ups and downs, and you will find that a strong shared vision can work wonders as a much-needed compass.

Combined Customer Base
One of the best perks of collaboration is that you and your partner can take advantage of each other’s market shares and reach your target demographic more quickly. Therefore, when it comes to selecting the right partner, you must assess their market access and expertise. Ask yourself these questions: How large is our combined customer base? Is their market share really what I am looking for? Can it help me realize my goals? The more you know, the sooner you can decide.

How To Do It
Do Your Due Diligence
Making a good pick requires tons of hard work and more than a little luck. Since a good choice will pay handsome dividends and a bad choice can derail your plans entirely, knowing as much as you can about your partner is a step you cannot (and should not) skip. Therefore, do your diligence. Whether they are extensive interviews, detailed strategy, budget discussions, painstaking reference checks, or better yet, all of the above; the effort is certainly worth it.

Discuss Your Goals
Without a common goal, you can have the best business partner, market share and reputation, and the collaboration can still fall through. Synchronizing objectives requires a substantial investment of time, openness, and perhaps, vulnerability. Yet, these candid dialogue of visions and strategies are certainly some of the essential ingredients of a successful alliance. The more transparent you and your partner can be, the better you both can launch your combined business, take advantage of market opportunities, and handle unforeseen circumstances.

Manage Your Expectations
One of the main factors that could make or break your partnership is the clarity of your agreement. Beyond understanding each other’s goals and potential benefits, both you and your partner should clearly define your partnership’s capital and personnel needs, what each of you is committed to contribute, and an agreement on what each of you is expected to get out of it. With realistic expectations, both of you can maintain a strong relationship through good times and bad.