Business Partnerships can turn out to be a blessing or a curse. More often than not, performing basic due diligence can keep you from ending up in bad partnerships. So, have you done your homework? Are you ready to trust your financial security on someone elses personality, work ethic and business acumen? Before you drink the partner Kool-Aid, here is a list of the top ten worst business partners for your start-up–along with some tips to help you avoid this cast of characters:
Worst Business Partner 1. Mr. Employee
Mr. Employee is a first-time entrepreneur with a pristine resume and an abundance of references. He enjoys collecting a weekly paycheck, health benefits, and eating dinner with his family nightly at 7 p.m. Unfortunately, Mr. Employee isnt really self-sufficient and doesnt know how to move the business forward without you instructing his every move. Plus if your investment deal doesnt pan out soon he is going to need to find a real job to pay the kids college tuition.
Business Parnetership Tip: Risk-adverse individuals who do not share your priorities will not be productive partners. Pass up individuals who cannot commit equal time, energy and financial resources.
Worst Business Partner 2. Mr. Perfectionist (also known as Mr. Procrastinator)
Mr. Perfectionist needs every i to be dotted and t to be crossed before he schedules an official product launch date. He enjoys researching competitors, building industry case studies and improving his 150-page business plan. Mr. Perfectionist really wanted the new business to be up-and-running by now, but still feels something isnt quite right. He plans on putting together another comprehensive survey to send to all of his colleagues, friends and family in the next few weeks to help flesh out the concept further.
Business Parnetership Tip: A good plan today is always better than a perfect plan tomorrow. Steer clear of excuse-prone procrastinators. Seek out self-starters who run with the ball and make things happen.
Worst Business Partner 3. Mr. College Buddy
Mr. College Buddy had a stroke of genius while out at the bar one night, wrote it on a cocktail napkin and asked you to help him make it happen. He enjoys bragging about his great idea and giving you directions on how to execute (hes not into the heavy lifting thing). The issue: hes moving across country to start med school in the Fall. But fear not, Mr. College Buddy will make himself available by phone when hes not studying, working, in class or on a date. Hell be sure to forward you the address where you can mail his 50% of the profits.
Business Parnetership Tip: Never assume all of the risk in exchange for half the reward. Ideas are worthless without proper execution. Before you bring a co-conceived idea to fruition, make certain that your partner plans to be around for the long-run. Napkins are not legally binding. Always execute an operating agreement.
Worst Business Partner 4. Mr. Inventor
Mr. Inventor thinks hes created the next billion-dollar widget. He enjoys giving two-hour dissertations on Chinese electrical engineering standards to investors and making business decisions based on nice people and gut feelings. Mr. Inventor doesnt really understand the phrase in the black, but feels its imperative to spend all of the companys investment proceeds on research and development.
Business Parnetership Tip: Brilliant academics are not necessarily brilliant businessmen. In lieu of a partnership, first consider licensing deals or strategic partnerships. If you decide to go ahead with a partnership, be sure your agreements clearly distinguish the differences between product control and operational control.
Worst Business Partner 5. Mr. Right
Mr. Right will be the first person to tell you that he is never wrong. His favorite phrase is my way or the highway. He will rarely discuss his decision making process because he views such discussions as a weakness. He enjoys demeaning partners who dont agree with him and making decisions without telling them. Funny thing about Mr. Right: he always seems to blame everyone but himself when his plans dont pan out.
Business Parnetership Tip: Communication is the key to a successful partnership. Find a collaborator, not a dictator. No one is always right.
Worst Business Partner 6. Mr. Dreamer
Youll hear Mr. Dreamer say this line a lot: One day, when were millionaires He loves talking about retiring by 29 and how he intends to spend his hypothetical millions on a gold plated yacht that hell dock off the coast of his private island. One small problem with Mr. Dreamer: he doesnt seem to know how to keep the business above water next month.
Business Parnetership Tip: Big paydays come from years of hard work and persistence, not excessive rambling and daydreaming. While its important your partner be both positive and optimistic, it is equally important that he or she is grounded and focused.
Worst Business Partner 7. Mr. Spender
Mr. Spender cant possibly survive without a six-figure salary, lavish office and an in-house cigar roller. Price is no object when it comes to entertaining a client or flying first class. If youre lucky, Mr. Spender might even invite you to one of the extravagant dinner meetings that he charges on your companys corporate card.
Business Parnetership Tip: There is no such thing as the unlimited checkbook. Partner with fiscally conservative, financially responsible individuals who strive to make every dollar benefit company growth and development–not their personal lifestyles.
Worst Business Partner 8. Mr. CEO
Mr. CEO feels compelled to tell everyone that he is a CEO within 30 seconds of meeting him–even if his company is worth less than the paper on which his business card is printed. He loves cocktail receptions, his name written in fancy fonts, and stacks of luxury car magazines neatly piled on a coffee table in plain sight of customers. The only thing he doesnt seem to like: real work.
Business Parnetership Tip: Successful companies are not built on titles, talking and toys. Keep away from selfish, egotistical individuals who want to talk the talk versus walk the walk.
Worst Business Partner 9. Mr. Vacation
Id tell you more about Mr. Vacation, but I dont know much about him. He never seems to be around.
Business Parnetership Tip: No-shows are dead weight and eat away profits. Make sure that your operating agreement clearly outlines partner responsibilities and vacation days.
And the partner to avoid like the plague is
Worst Business Partner 10. Mr. Personal Issues
Mr. Personal Issues always has a sad story. On the same day as your companys keynote presentation at the big conference, his sons wisdom teeth need to be pulled and his dog died of pneumonia. He would love to attend next weeks investor meeting, but his divorce hearing might tie him up all day. Unfortunately, Mr. Personal Issues cant afford his legal bills, so hell need to pull a little more money out of the company this month to avoid his ex-wife from taking 50% of his equity in the settlement. Thankfully, this will be the last time he needs money
Tip: Youre not in business to be a babysitter or a psychiatrist. Know everything there is to know about a prospective partner before you sign on the dotted line. Discuss everything from business to politics to family life to finances. If a potential partner seems to have a few screws loose, run as fast as you can in the other direction.