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You would think that finding a business partner for your startup is like finding a spouse. You are wrong. It is harder. And it’s a tougher marriage to manage.

Done right, a business partnership can take any startup to stratospheric levels. Look around you. No model entrepreneur of today has really gone at it alone—be it Steve Jobs, Bill Gates or even our very own Narayana Murthy.

But how does one really go partner hunting, and how does it help the business grow? We give you the lowdown on that.

The right partner
Let us address the biggest question of them all first. How does one define the right partner for growing an already running business? Well, there are four necessary cards that your business partner must bring to the table.

* Your vision is his: He must share your vision and goals when he comes on board. That must be explicitly clear to you. It only works if he is in it for the long run. If he is in it for the short haul, keep searching. You have the wrong man.

* Your weakness is his strength: A business partnership works best when the two partners have complementary skills. Your partner must bring to the game skills and experience that you lack and that your business needs. That is a perfect fit.

* He has a different point of view: Constructive criticism and constant feedback form the backbone of a growing business. Your partner should be able to give you those.

* He is able to bring funds: Or he at least get you access to them. A partner who brings his own funds to the table is the real deal. He is putting his money where his mouth is. But even if he does not bring his own funds, his credibility and network should be able to.

Partner the right way
It is equally important, after finding the right business partner, that you firm up the partnership the fair and right way, both in law and spirit. For this, a legally-binding agreement should be framed that contains at least the following:

* Contributions: It is important to nail down exactly what services and resources your business partner will bring to the table. And what percentage of equity he will get in return.

* Profits and losses: What will be the ratio of profits and losses accorded to the partner? Will it be in line with his shareholding?

* Role and responsibilities: The agreement should nail down the responsibilities and duties of your partner. He should be clear in his brief. It should also fix the level of authority and decision-making the partner would enjoy.

* Withdrawal, death or disability: There should be rules for handling the departure of a  partner due to these reasons. You should see to it that his long-term interests are protected so that he is assured of being in business with you.

* Resolving disputes: Who arbitrates on the disputes? Appoint someone who is acceptable to both and is expected to be fair.

Review and re-think
A partnership is useful only when it is helping the business grow. If not, you must take a re-look at it. The best time to do so is during the periodical review of the agreement. With time, people change and so do conditions. Expect the unexpected.

©Entrepreneur May 2010

Tags:
business partner, growth, partnering