Guest author Scott Gerber is the founder of the Young Entrepreneur Council.
Some of the best ideas and products come from strong business partnerships. Partnering with a company your size (or bigger) can also supercharge your growth efforts.
But as with all relationships, it’s important to do more than scratch the surface when vetting potential partners—and putting systems in place to guide the relationship as it develops is important too. Twelve entrepreneurs from Young Entrepreneur Council (YEC) explain the specific steps they took before signing on the dotted line, below.
Ask for References
Resumes are great, but most people can stretch the truth, and many flat out lie. What I’d rather see are examples of what you’ve done (especially what you’ve done that is hard to do). I then want to speak with prior employers to find out what their experience was working with you, what they feel you do best and what your weaknesses are.
—Travis Steffen, Cyber Superpowers
Look at Their Online Presence
You can learn a lot about folks based on their presence online. LinkedIn allows you to see who they are connected to, what people say about them and what they say about others (which is often very valuable). Twitter allows you to understand how they think about the world and what content they consume and appreciate. Facebook can help you understand what is important them in their personal life.
Lastly, looking for any blog posts or press mentions can give you great insight into how they operate and any previous success they may have had. Combining this with reference checks, multiple face-to-face meetings and hopefully a meal should give you a good sense as to whether or not they are someone who you want to do business with.
Communicate Expectations
It is imperative to establish open lines of communication with all business partners. All parties need to respect that a partnership is a two-way street. Without proper expectations set forth, synergies can devolve quickly.
Identify point people on each team and set regular check-ins. Create shared documentation that is updated in real time so everyone is on the same page. Transparency and communication are the key to successful and fruitful partnerships.
—Sharam Fouladgar-Mercer, AirPR
Make Sure They Share Your Values
Everyone involved with our company, from investors to employees to partners, believes in our company values and ethical standards. Working with partners who do not share these values could seriously discredit our reputation with customers and other partners. We are extremely thorough when interviewing partners to ensure they are a fit representation of our company before entering any agreement.
—Jim Salters, The Business Backer
Work With Them for a Week
Nothing will show you exactly who you are working with like real, working experience with the person. It will show you how the other person makes decisions and how they operate in general.
You’ll also understand if you have fun working with this person or group or whether they bring you down in any way. Find out if they make you better or if they make things harder or more difficult.
Use Careful and Critical Examination
The best way to prepare for a journey into a new business partnership is to do just that—prepare. Examine the relationship from every possible angle and be very technical from the beginning about what you aim to achieve. This will save you a lot of heartache down the road.
Make sure this will result in a mutually beneficial relationship for both parties by eliminating any doubts, questions and concerns you may have. Assign an experienced liaison to the task of vetting these opportunities. They should be well equipped to catch any “holes” in proposals and understand how the new relationship will fit into the company’s existing infrastructure.
Ask Around
I am amazed by how many entrepreneurs go into a relationship blind. Past behavior is a powerful predictor of how a leader, or for that matter any person, would behave if put in similar situation. No talk, no brainstorming and no legal document can substitute reference checks.
Talk to Them
It’s very important to choose the right people to partner with. The wrong choice in this area can have disastrous consequences.
That’s why I avoid making rash decisions based solely on obvious factors such as how successful and experienced the partner is. While these are important things to consider, I also look more deeply at their core values and long term goals.
Some of this can be done by researching their history, online presence and overall reputation. More than anything else, however, I make sure that I talk to them a great deal before signing any agreements. I spend plenty of time communicating back and forth with them online, by phone, Skype or however is convenient. This gives me a good overall sense of who I’m dealing with and how compatible we are.
—Shawn Porat, Fortune Cookie Advertising
Discuss Future Obstacles
When entering into a new relationship, it’s imperative to make sure that the goals of both sides are a match. Although potential partnerships and mergers are exciting at the beginning, you cannot let excitement cloud your judgement.
Just like you probably wouldn’t marry someone after a couple of dates or without discussing things like having children, religious beliefs or the future, you should never enter into a business partnership (which is like a marriage in a lot of ways!) without discussing the values, goals and systems that will be critical to your shared successes.
If you aren’t prepared to have a very real conversation and bring up potentially uncomfortable topics in great detail, it might be good to reevaluate whether the potential partnership is a good fit.
Look for Consistency and Results
Asking for references only goes so far because most people know that you usually won’t call them, or that they could have been coached in advance. That’s when Google and other public databases become your best friend. The anonymity of the Internet encourages people to be more open and honest (as well as dishonest and hateful, so take what you find with a grain of salt).
When you search, you want to be looking for two things: 1. Does this person or persons have a steady hand? Do they stick with projects, relationships etc. for the long haul? Does what they say match with what’s published about them? 2. Where did they produce results in the past? What did it look like and were the stakeholders happy?
Do a Background Check
I absolutely love working with angel investors and venture capitalists in the startup community, and am constantly amazed at its vibrancy and growth. But one of the most surprising aspects of the community is the amount of unsavory and downright fraudulent characters there are lurking in the weeds who want to take your money, equity or time.
To protect your company or investment, do a thorough job diligencing the backgrounds of anyone who will be in a position of power within your company. A Google search is a good first step, but a knowledgeable agency can dig up whatever black marks your potential partner would rather you not know about. Hopefully their record is clean, but if not, there is no excuse for not finding out until it is too late.
—Peter Minton, Minton Law Group, P.C.
Examine Personal Goals
In a business partnership, you have to be aligned on your vision of the company and/or come to an alignment. Likely the latter. Your business partner’s personal goals also have to match (or at the very least not contradict) yours.
Can your business partner endure hard times, long hours, low pay and/or no pay? At some point in the company you will struggle. It’s important to know how your partner would handle it.
