Thinking about going into business with someone you really, really like (or maybe even love)? Don’t.
While it might seem logical to launch a new venture with someone you get along with, that closeness can actually be a drawback, says Sandy Jap, a professor of marketing at Emory University and author of Partnering with the Frenemy.
“If you have a good relationship with someone, say a friend, that warm fuzziness you feel can often times keep you from seeing clearly the economics of the situation,” she says, pointing to research that shows good rapport can actually lead to bad business decisions.
Confused? Don’t be. Jap outlines the necessary steps to finding a business partner that will help your enterprise soar.
1. Three little words: “You complete me.”
The best qualities you can find in a business partner are ones you don’t possess yourself. Basically, you want your partner to bring something to the table that you know you can’t.
“You’re looking for a partner that does something you don’t have expertise in,” notes Jap.
“Whether that’s R&D, transportation logistics, software development, manufacturing… you always want a partner that’s going to have a skill set or process that’s complimentary to whatever it is you do.”
2. Look for someone blunt
Obviously honesty is an essential quality in anyone you go into business with, but Jap says what you want is something that goes beyond honesty.
“Trust is useful for greasing the wheels, but what research shows is that trust alone isn’t enough for maintaining business relationships that work,” says Jap.
“What you’re looking for is a partner that will be honest with you, even when you don’t want to hear honesty, and that’s going to be brutally honest, and honest quickly,” she adds.
Though it may hurt to hear at the time, a partner that lets you know of a problem at the earliest stage is an incredible asset, she adds.
3. Ask the tough questions
When you’re starting a new business, obviously the last thing you want to think of is it going wrong, but Jap says it’s important to think of that as a possibility — particularly if you plan to go into business with a friend or relative.
“You have to think through what’s going to happen if this doesn’t work, and how that will feed over into your personal relationship. Will your relationship be able to stand that?” she says.
She highlights that it’s particularly important to expressly outline the roles each of you intend to play, what your expectations are of each other, and how you intend to handle conflict in the future.
“You don’t want to play the blame game. If you’re going into business with someone close, you need to think in advance of what and how the relationship will work if things go wrong.”
4. Charisma is good. Reliability is better.
Charm can go a little way in furthering business negotiations, but it’s hardly the be all and end all, says Jap.
“So many people believe that better relationships are always good for business, and it’s somewhat true, but having a warm and rosy relationship or spending time to wine and dine a customer can be expensive and can pull your focus away from a customer relationship that may be more deserving of that effort,” she says.
Rather than pick a partner based on their schmooze factor, she says it’s better to pick one who is reliable — as unsexy as that may sound.
“You want a partner that is trustworthy, and that really means predictable to some degree. You want a partner that you know is not going to be opportunistic or try to screw you over constantly or cheat in small ways,” she says.
5. Cast your net wide
As mentioned earlier, it’s best to team up with someone who has a different set of skills to you, and that often means looking beyond your personal relationships.
“Unless you come from an enormous family, you probably won’t find too many complementary skill sets within your own family,” she says.
Instead, she recommends relying on a network of professionals, which she says you can source by reading trade publications, networking at industry events, and researching what suppliers and distributors are favored by the competition.
She also recommends joining exchanges, like online procurement network Ariba, which match buyers and suppliers.