Solopreneurs’ biggest decisions to date are in relation to forming a business partnership. We often compare it to something as close to marriage, but in reality, they’re not even as close to being the same thing.
Business partnerships are a lot harder.
There are about 50-80% of partnerships that fail in just a few years. It may pose a big opportunity, but it’s also risky in a way since you’re not just sharing responsibilities. You’re sharing decisions, profits, and the future of your business.
On the bright side, if you’ve got the right partner, scaling your small business growth in Australia becomes possible. As the old saying goes, if you want to go far, go together.
Below, we’ve compiled a list of illuminating questions to ask in choosing the right business partner.
Also Read: 5 Ways Business Partnerships Scale Your Business
If you’re a solopreneur and you‘re considering forming a business partnership, make no mistake about asking a lot of questions. You are, after all, inviting that person into your business. This includes inviting their good sides and their bad sides.
Here are the 10 questions you should be discussing with a prospective partner:
1. Do We Share the Same Vision for the Business?
2. What Are Each of Our Roles and Responsibilities?
3. What Strengths Do We Each Bring as a Business Partner?
4. How Will We Handle Conflict and Tough Decisions?
5. What Are Our Financial Expectations and Contributions?
6. How Will Profits, Losses, and Equity Be Split?
7. What Is Our Exit Strategy If Things Don’t Work Out?
8. How Committed Are We to the Business Long-Term?
9. How Do We Make Decisions as Business Partners?
10. Do We Actually Work Well Together Day-to-Day?
Let’s get into more details!
Also Read: Scalable Online Business Ideas in Australia
Having shared a vision for the business is the foundation of a partnership. Without it, even the most skilled partners will eventually pull in different directions. Talk about where you see the business in five years or maybe even beyond that.
Are you building rapid business growth, or are you aiming for stability and freedom? Do you want to scale faster, or keep things the same way it is?
Ambiguity is one of the fastest ways to create tension in a business partnership.
Define who is responsible for what early on. This includes the day-to-day operations, decision-making authority, and accountability to reduce overlap, eliminate confusion, and keep your small business running efficiently.
A great partnership isn’t solely about the similarities you both have. Complementarity matters just as much.
Look at your strengths and identify the gaps. Then assess whether your prospective partner fills those gaps. For example, if you’re strong in pitching ideas to investors, your partner should balance that by bringing their strengths that aren’t in the same boat as yours.
Two people with identical strengths can actually slow business growth rather than accelerate it.
There’s always going to be conflict and tough decisions between you and your prospective partner, and most of the time, these sorts of challenges come later on.
Will you have a structured decision-making process? Will you bring in a third party if needed? But even before they arise, it’s better to figure out how disagreements will be resolved without pointing fingers at who’s responsible.
Money is one of the most common sources of tension in any small business partnership. If one business partner expects quick returns while the other is focused on long-term growth, problems will surface quickly.
Here’s a quick list of things that you should be upfront about:
This is where many partnerships either get solidified or fall apart.
Equity should reflect not just financial investment, but also time, expertise, and risk. Profit distribution should be clearly defined, along with how losses will be handled.
That said, don’t rely on verbal agreements. Structure this properly from the start.
It might feel uncomfortable, but discussing an exit strategy is one of the smartest things you can do. What happens if one partner wants out? What if the business fails? Who buys out whom, and how is the valuation determined?
Not every business partner has the same level of commitment, and that’s where problems usually begin. Is this a full-time venture for both of you? Are there other obligations that might divide attention? Are you aligning on how much time and energy the business requires?
Decisions can either make or break a partnership. Will decisions be made jointly, or will each partner have authority over specific areas?
This is often overlooked, but it’s one of the most important questions. You can have aligned goals, strong skills, and structures, but if you don’t work well together daily, the partnership will feel like friction instead of momentum.
Test this before committing. Work on a project together. Solve problems together. Observe how your prospective partner communicates under pressure.
There are two things that you need to determine at the end of the day: what the purpose of your business is and why you need to form a business partnership.
Having the right partners may be the most rewarding experience, but at the same time can be the most devastating one with the wrong partner.
This happens all the time.
If you’re currently a solopreneur or considering bringing in a prospective partner, Scaling can help! With 11,000+ entrepreneurs inside the marketplace, you can find and connect with partners instantly.
Sign up for free or download the Scaling App to find the right partners to grow your business.
If you have not found the right person yet, start there. You can find a business partner in Australia and work through these ten questions before anything is signed.
