If you choose the wrong business partner, you could be setting yourself up for disputes in the future. Worse than that, you may have selected a partner who will eventually cause the business to fail. The future for you and your company depends on making the right choice.
But how do you know who to avoid and who to choose? Here are some red flags that you should look for when selecting a business partner.
They’re not as dedicated as you
Complications often arise when one person is highly dedicated to the business and the other just sees it as a side project. The first partner ends up doing 90% of the work, although they are only benefiting with 50% of the earnings. This can cause resentment, financial stress and many other issues.
You can’t trust them
Trust between business partners is an imperative part of the process. You have to know that they’re being honest with you and that they are putting the company’s best interests first. If you can’t trust them, or if you think they may only be looking out for their own interests, it’s a major red flag.
They don’t want to sign a partnership agreement
A partnership agreement is a legal contract that the two of you sign, officially establishing you as business partners and helping to define your roles at the company. This document can be a major benefit, helping the company run smoothly and helping you avoid disputes. If your business partner refuses to sign or doesn’t think it’s necessary, they’re just increasing the odds of a dispute in the future.
As you draft a partnership agreement and take other legal steps to establish your new company, make sure you know exactly what rights and obligations you have.