Starting a business venture with a friend sounds like a great plan—what could go wrong? If they’ve been a loyal friend and a positive influence on your life, why wouldn’t they do the same for your business?
While there are many successful tales of business partnerships that started out as friendships, you may be surprised to learn that many more of these partnerships end up failing in the long run. Some partners may not be able to handle the ups and downs of starting a business, and if business partners don’t complement each other’s skill sets, it’ll be hard to get things accomplished.
And not all successful business partnerships are founded on friendship — some prosperous entrepreneurs are able to do so well by simply keeping personal issues out of the workplace. But just as all friends shouldn’t become business partners, all professional colleagues shouldn’t be, either.
Whether you’re looking to add a partner to your existing business or form a new startup with a close friend, there are plenty of red flags to watch out for. In fact, experts will tell you to enter into a business partnership with the same care you would enter into a marriage.
Here are some of the biggest signs that your business partner is going to be a hindrance to your business rather than the rewarding addition you signed up for.
1. You don’t trust them as far as you could throw them.
Hopefully, you wouldn’t enter into something as important as a business partnership with anyone you didn’t trust. But you might be surprised by how many entrepreneurs make that mistake.
When it comes to the future of your business, it’s important that you trust your partner in every area — or at least in the ones that really count. Think about how much you trust them currently. Have they given you any reason to be concerned?
Trust is important between business partners, because without it, your company’s reputation may be damaged. Being occasionally behind on projects is one thing, but you don’t want to end up in a partnership with someone who’s comfortable with unethical business practices.
It should go without saying, but if there’s any chance your potential business partner could get you into legal trouble, run.
2. They have the exact same skills as you.
It’s human nature to surround ourselves with like-minded people. If you’re an artist, for instance, you may easily make connections with other artists.
Surrounding yourself with the right people is one of the major keys to success, but that doesn’t mean the people you work with should be exactly like you. Think about it — if two business partners bring the exact same things to the table, what are they going to accomplish?
You want to find a business partner who complements you, not one who’s basically a replica of you. They may be a great friend, and even a great person to consult if and when you encounter a business problem, but that doesn’t mean you should be partners.
The right business partner will possess a skill (or skills) that you simply don’t have. For example, you may be an amazing graphic designer, but that doesn’t mean you have the coding skills that are necessary to build a killer website. Partnerships flourish when individuals have the same end goals and the different skills needed to accomplish them.
3. Their personal finances give you pause.
Not every business owner needs to be a finance guru or a millionaire. We all have different capacities when it comes to earning and saving money, and that’s fine — personal finance is great, because it’s something that everyone can learn.
But if you know your potential partner is in financial dire straits, now is likely not the right time to enter into business with them. If they haven’t learned the basics of taking care of their own finances, how are they going to handle partially running a company?
It may be controversial, but it’s no wonder that 60% of employers perform a credit check on their potential hires — people who don’t take care of themselves financially are simply a greater liability. While the personal finances of individual employees may not make a difference to large corporations, in a small business (particularly a startup), no finances are completely private between business partners.
Additionally, money stress is a horrible thing to endure, and it can affect every aspect of a person’s life. If your potential partner is in the middle of a financial hardship, it’s likely best for them to deal with that before adding even more financial stress to their life, like starting a business.
4. They won’t compromise their way of doing things.
Once again, a good partnership works just like a marriage—you must be willing to give just as much as you take.
Thanks to the internet, industries can now change overnight. What will happen if you’re stuck with a partner who is unwilling to change with them?
Long-lasting, successful businesses are run by people who are willing to change as the business landscape changes. If your partner is too stuck in their traditional way of doing things, it could be a sign that your business will stall a lot sooner than you think.
5. You don’t share the same values.
This final warning sign may be the most important: you realize you don’t share the same long-term vision and goals as your partner.
If you have conflicting ideas for the future of your business, it’s a major red flag that it won’t work out. You’re not planning to change your vision in the future — why would your potential partner be any different?
Starting a new business with a partner means it’s time to have a lot of frank conversations. How do they want to approach your business strategy? Finances? Organizational planning?
While you may not have the same ideas right off the bat, this is yet another area where compromise comes in. You and your partner should share the same major goals for your business and both be willing to meet each other halfway on the smaller details. Don’t think major conflicts at the beginning will simply resolve themselves in time, because they most likely won’t.
If you don’t recognize these five warning signs in your potential partner, good news: it’s probably a partnership worth pursuing. Be honest and upfront with each other about your business goals, values, and even your shortcomings, and you’ll be that much closer to running a successful business.