Article Contributed by Michele DeKinder-Smith
When two business owners form a partnership, each one brings strengths, skills, and enthusiasm to the table. It’s important for the strengths and skills of one partner to complement those of the other so that the new partnership offers a broader range of skill sets. In some cases, one or both partners may have shaky credit history or even a criminal history – and those are guests many people wouldn’t want at their table. Therefore, when examining a prospective partner’s positives, it is important to check for negatives, as well.
Extensive research with women business owners about all aspects of business ownership reveals the importance of due diligence when selecting a business partner. Further, research shows there are seven main characteristics to consider in prospective partners. This article discusses the details of two of those characteristics.
Characteristic 1: Complementary Business Skills and Business Competence
The question: “What is each partner bringing to the partnership in terms of skills, knowledge, work experience and strengths?”
Most female entrepreneurs are not looking for clones of themselves in a partner; rather, they are looking for a partner whose skills and strengths fill in the gaps in their own. If this partnership is a new one, it’s important that each partner demonstrates competency through personal and professional references, as well as through a demonstration of her work and abilities.
To gather more information about a prospective partner’s competency, spend some time with him or her – whether it’s apprenticing, working together on a small joint project or talking with his or her employees and customers. Don’t just check out the surface; delve into their work as deeply as possible.
It is essential that a business owner checks out her prospective partner’s work in person before launching a partnership. Impressive brochures and great chemistry may be alluring, but they may not make up for what a prospective partner lacks in experience or skills. Most female business owners have heard that past behavior is the best predictor of future behavior – and that is true in business, as well. While past accomplishments are not one hundred percent accurate when forecasting the future, past records of achievement are excellent clues.
Criteria 2: Solid Credit History and No Trouble with the Law
The question: “Do prospective partners’ credit history and legal status live up to the way they present themselves as businesspeople?”
A female entrepreneur may have a prospective partner in mind, and may have great chemistry with her. The situation may look, “all systems go.” Would that status change if the entrepreneur learned that the prospective partner had bad credit history, was late or delinquent on child support or alimony payments?
Depending on how much money is at stake in a partnership, prospective partners may decide to perform credit and criminal checks – after all, any financial pressure the partners experience will directly affect their business motivations and behavior. That same idea carries over into the new partnership; for example, if the newly-created business began to struggle financially, how would the partners react? How have they reacted in the past when under pressure?
Because each partner will be placing her livelihood in the other partner’s hands, it is absolutely appropriate to ask for evidence that each partner can handle her own financial affairs. In longer-term and/or legal partnerships, one partner’s decision-making can significantly impact the other’s financial well-being.
According to the Fair Credit Reporting Act (the national law that governs the credit industry), joining with someone in a business partnership is considered a permissible reason to access his or her credit history information.
Begin with local credit bureaus, credit reporting agencies and the courthouse in the county where the prospective partner lives.
New partners often overlook or avoid these steps, viewing them as unnecessarily cautious steps that will slow down the process and introduce hostility into the relationship. However, these steps are critical, if not necessary, especially when the partners don’t know each other very well.
When creating a partnership, it is essential for both business owners to understand all of the facets each partner brings to the table – from skills and competency to credit and criminal history. Each of these items directly affects the outcome of a business partnership.
About the Author:
Michele DeKinder-Smith, is the founder and CEO of Linkage Research, Inc, a marketing research firm with Fortune 500 clients such as Starbucks, Frito Lay, Tropicana, Texas Instruments, Hoover Vacuums and Verizon Wireless. She parlayed this entrepreneurial knowledge and experience into founding Jane Out of the Box, a company that provides female entrepreneurs like YOU with powerful resources, such as educational blogs, teleclasses, newsletters, and books. Michele was recently named to the National Association of Women Business Owners national board of directors for a two-year term. Buy a copy of her latest book with coauthor Azriela Jaffe, “See Jane Collaborate,” which contains more in-depth information about this article’s topic, at www.seejanecollaborate.com.
