Too many small businesses start up as a partnership or company formed by friends or family without any real analysis of whether these are the people to make the company work. They may be nice people, good friends and enthusiastic but this is not enough to ensure the new business has a chance to make it. (However, if they are not even nice people and enthusiastic you may want to think twice anyway). There are 3 main considerations.
- Is this person experienced and skilled at an area actually needed by the business ?
This will include looking at qualifications and how these complement your own. There is not a strong case for going into business with clones because there will be gaping weaknesses of areas of expertise from the outset unless you have taken this into consideration and planned for how these gaps in expertise can be plugged. Can you buy in the expertise, say, accountancy or payroll, or get costs for another company to do a particular operation you can’t manage ?
- Is this person hard working?
We can often choose our friends because they are pleasant and good company. These qualities are not going to be enough unless you are willing to put up with working twice as hard as your partner. If your friend is relaxed and laid-back this may really get on your nerves if it turns out that he/she likes to chat instead of getting down to work, comes in late or goes early and keeps telling you to relax!
- Is this person putting capital into the business?
You may choose your partner because he or she is capitalising your business as an investor and will not be expected to actually work day to day in the company. This is obviously OK though depending on how successful your business is, you may regret offering a 50% share in your business if the business begins to have a turnover of millions and the investor put in only £5000. It is better to get financial and legal advice before making any major decisions of business share. If you are the one putting start-up capital into your business then you should be sure that your partner is offering valuable skills and experience the business needs.