Bringing on a business partner is one of the most important decisions you’ll make as an entrepreneur. The right partner can turbocharge your growth, while the wrong one can set you back years. 

So how do you evaluate potential partners to ensure you’re making the best choice? Let’s break it down.

Evaluating the Business Opportunity

The very first thing to analyze is the business model and opportunity itself. Even the best partner won’t be able to overcome a fundamentally flawed or un-scalable business. 

Here are the key elements to assess:

Scalability

Ask yourself, honestly: Is the core product or service something that can be replicated and expanded efficiently? As operations scale up, can you avoid exponentially increasing overhead costs? Are there processes that can be systematized and automated as you grow?

These are critical questions that, if unanswered, can stifle a business. Some businesses don’t need, or simply cannot handle, a partnership without first expanding out their core products.

Revenue Potential

The quality you can expect in a partner is directly proportional to the quality of the opportunity you’re pitching to them. A good business partner is smart…which  means they’re not going to go all in on a mediocre opportunity.

Be prepared to answer their questions on:

• What is the realistic upper limit on revenue for this particular business model?
• Is there a huge, untapped market that can support 5X, 10X or more growth?
• How capital-intensive will it be to reach that potential revenue scale?

By analyzing these factors, you can identify business models primed to become juggernauts with the right leadership and execution. Which brings us to…

Evaluating the Partner

Once you’ve proven the viability of the business on its own, it’s time to execute your plan to find a good partner. 

When vetting partners, there are five primary qualities to consider. The better they are at each of these skills, the more they’ll be able to contribute to the success of your business. 

Find someone who excels in the skills you don’t. Be brutally honest with yourself. Look in the mirror and ask yourself, what am I not good at? Then seek out someone better.

#1 Vision & Ambition

• Does your potential partner have a strong “Why?” driving them? Or are they throwing in on the first opportunity that looks interesting?
• Are they dreaming big with goals that extend well beyond their current situation? Or are they content with staying stagnant?
• Do they have a track record of persevering through challenges to achieve ambitious goals? Or do they have a string of half-formed ideas they dropped when it got hard?

#2 Skills & Experience 

• What relevant skills, experience, and capabilities do they bring to the table? Are they applicable or irrelevant to the industry?
• Do their strengths complement and fill gaps in your own skill set? 
• Are they willing to learn new skills and are actively improving the ones they already have?

#3 Work Ethic

• Are they willing to outwork everyone else to make the business a success? Or do they expect others to pick up their own slack?
• Do they have a ferocious appetite for building something great?
• Are they more concerned with hours worked, or results gained? 

#4 Personal Finances

• Do they have a stable financial situation that allows them to go all-in on the venture, or will money worries serve as a constant distraction as things get lean?
• Do they have a good history of money management? Or do they irresponsibly spend without tracking?
• Are they familiar with the ins-and-outs of financing, credit, and funding? 

#5 Values Alignment

• Do you share a compatible vision for how to build and operate the business? 
• Do you share philosophies on important working conditions such as working remote, time off policies, pay scales, bonus programs, ect?
• Are your personal values, principles and priorities aligned?
• Are personal conflicts likely to bleed into the business space?

Go through each of these questions and answer them in depth. No one is going to check every box perfectly. Your goal is to find someone who checks all the boxes you do not. 

That is what separates a partnership from simply having 2 chefs in the kitchen. When someone compliments your skills rather than overlapping, you can accomplish things you could not on your own. 

Avoiding a Bad Partnership

While no one has everything, there are some red flags that are full nonstarters when it comes to a business partner. Exhibiting any of these traits means they’re likely to be an overall drain on the business, no matter what other qualities they possess. 

• They’re purely motivated by money or other short-term, selfish interests
• Their ambition is capped and they’re wanting to stop working as soon as they reach it
• They tend to make impulsive, unwise decisions under stress
• They have a track record of giving up or failing to follow through
• You identify notable character flaws like shadiness or narcissism

A bad partner can derail even the most promising business opportunity. Don’t ignore red flags just because you really want to move forward.

Organization Does Matter

One often underrated aspect of partnering is the ability to systematize and bring order to the inherent chaos of rapid business growth. 

Chaotic startups are the exception, not the rule. A ping pong table in the break room does not equal functional staff management, and having organizational software is not the same as using them. 

Even the best business model will encounter major growing pains when scaling up. Your partner should be willing to be hands-on in the process of:

• Invoicing and accounts receivables 
• Customer service breakdowns 
• Staffing shortages due to lack of efficient hiring/training
• IT and tech problems as systems get overtaxed
• General communication bottlenecks and lack of transparency
  
  

Especially at the start. A keen eye for detail, and willingness to get involved, not believing they’re above any sort of work, is a must-have for a good partner. 

In fact, the best partners have a keen eye for identifying these inevitable challenges before they happen – and designing systems, processes and organizational structures to overcome them.

With the right preparation, you can accelerate growth through the scaling phase. 

The Bottom Line

Picking a good business partner isn’t easy, but it can make or break your success. 

By breaking down the process into answerable questions, you can ensure you make the right choice. Information is everything: so gather as much as you can before committing.