TITLE: Business Partner Considerations to Make [Before It’s Too Late]
Suppose you are considering a potential candidate to be your business partner. And you’ve recognized that the person is great at what they do skill wise or from a professional standpoint. However, you have observed some interpersonal flaws. Maybe too much ego, maybe they’re annoying, maybe there is room for improvement in how they treat others. Maybe they party too much. Basically, they have, let’s say, some noticeable issues. And while you would very much like to bring on the person as a partner, you are concerned that some of their deficiencies might become a liability down the road. What should you do? In just a second, I am going to give you three ways to approach this scenario. I’m also going to provide you with a valuable strategy to protect both you and your business, should you decide to enter into a partnership. <<>> You are now tuned in to Leonard innovation where the focus is on entrepreneurs who don’t come from wealth but have the potential to be great. My name is Justin Leonard. An interesting fact: Brazil is the world’s largest exporter of poultry, followed by the United States and then the European Union… A while back I discussed how entrepreneurs have to sometimes be a bit more pessimistic in their approach to making business decisions. Sometimes you have to begin by thinking about the worst possible scenario… because the reality is, many business partnerships often fail within the first few years. This is common. This is reality. Another thing: Your gut instinct can be tricky because… it’s not always reliable. Sometimes the people you thought would be ideal business partners end up becoming toxic. In other instances, the partner may not be the perfect fit, from a behavioral standpoint, but they are an integral part of business growth and development. So how do you decide? Particularly if your instinct is sending mixed signals. Do you take the risk with an imperfect business partner? Because someone who seems perfect in the beginning can bring your business down if conflict ever arises. Well, here are a few options to consider: Number one is to use your best judgement, or simply, go with your gut instinct. There are always risks when it comes to entrepreneurship in general. But if there are too many red flags up front, consider going in another direction by choosing a different business partner before it's too late. <<>> Option two: You can bring on the partner, but set it up so that each of you are able to work independently most of the time. If you can set it up so that most of the work is performed remotely, the partnership might work because there would be limited interaction. <<>> Option three is to forego any possibility of a business partnership, and instead, hire the person as a contractor. However, this might be tough if you are in the seed stage where the company doesn’t yet have the budget for independent contractors or employees. <<>> Alright, so we have our three options. Now, suppose you have weighed all options. You’ve looked at the pros and cons, and ultimately decided that the person is a BEAST at what they do, and you are willing to take a risk. Before bringing on the partner, there is a strategy that can be used to offer some level of protection for both you and your business. And that strategy is to gradually bring on the partner through an incentivized ownership structure. In this scenario, you are going to create a series of milestones that the potential partner must hit in order to gain ownership into the company over time. So, if they hit a milestone at 6 months, then a year, then 3 years, for example, they end up owning between five and fifteen percent of the company or whatever amount you decide. Each milestone would be based on whatever contingency you set. It can be performance based, certainly. But it can also include things like behavioral contingencies. For example, if a famous person does something questionable, the sponsor always has it in writing, that they can disassociate from anything they deem to be toxic. So, once again, when choosing a business partner, you unfortunately have to first think about everything that can go wrong. And today I have given you three considerations that should be made when evaluating a potential business partner, along with a prudent strategy to protect both you and your business from financial ruin. <<>> Lastly, for anyone looking to start or grow their online business, I created a free resource called the 90-day online launch guide which gets you set up with the important stuff. I also included some ideas on how to make money. If you’re wondering what software you need, and which other tools can make your business more efficient and easier to manage, and even how to do marketing… my suggestions are included. Once again, the 90-day online launch guide is free. For access, visit Leonardinnovation.com/launch once again leonardinnovation.com/launch. The link will be included in the description. Also, the audio version of leonard innovation is available through any major podcast service like pandora, AMAZON music, audible, google, apple, and spotify. And if you found this information helpful, please share it with a friend. Thanks again for tuning in.