There are a few things to consider before deciding whether or not to have a business partner. On one hand, having a business partner can give you access to more resources and help you grow your business faster. On the other hand, it can also complicate decision-making and lead to conflict if you don’t see eye-to-eye on business matters. Before you decide to take on a business partner, I help you weigh the pros and cons carefully to determine if it’s the right decision for your business.
Should you get a business partner for your business? I’ve run the gamut with business partners. I’ve had multiple partners, single partners. Of course, I’ve had businesses on my own and I’ve had some of the greatest experiences working with business partners and I’ve had some other experiences that let’s just say weren’t perfect.
I’ll discuss the pros and cons as well as my own experiences of having a business partner. On this episode of Bootstrap MD.
Hey guys, welcome to another addition of Bootstrap MD. My name is Dr. Mike Woo-Ming. I’ve been a physician entrepreneur for over 20 years and I’ve had multiple partners for my business. Of course, I’ve also done businesses. On my own. And what I’d wanna do today is discuss whether or not you need to have a business partner and some questions that you can ask to yourself or your potential business partner.
I’m currently in a situation right now. I’m considering having a business partner for one of my businesses, as well as a recently have a, new partner for my business. And I’ll tell you how that’s going as well. So when considering business partners, the first question, obviously you need to ask yourself “Do I need a business partner and why?” Maybe since I’m dealing with a lot of doctors on this podcast, maybe you’re just busy right now. Maybe you’re working full time and you just don’t have the time to be working on the business. Then that might be question of whether or not you need to actually start a business at that time.
But perhaps you’re looking for a business partner who can work behind the scenes on the day to day that you can’t. Maybe you have an idea. You wanna see that come to your fruition and that’s the best way other times. Maybe it’s just simply financial. Maybe you are, you wanna build a seven, eight figure business, but to do you’ll need a lot of capitals to start with.
And you’re looking for other partners who hopefully will have the same vision you do that can be involved in investing in the business. Another reason why you might wanna find a business partner is perhaps. You don’t have much business experience and you’re looking for a mentor or someone who’s got some business acumen in either marketing or sales that perhaps you just don’t have.
That’s also a great idea to get a business partner in my own experience. I think it’s best when you find a. People who compliment your weaknesses and vice versa. So you have strengths where they have weaknesses and vice versa. So I have had a software, a couple of software businesses where I had a few ideas, but I didn’t know anything about coding or any technical aspects.
So we found each other, my business partner and he had experience in coding and he experienced with working with programmers. On my background. I had a lot of the connections we needed in this industry, as well as I had marketing experience, perhaps more sales experience than he did, although he also had some marketing experience and it worked well.
We had a business for over seven years as I’m describing business partnerships to you, it’s almost similar to, as I would describe a marriage, cuz that’s what really it is. It is a marriage. And just as in marriages, partnerships can go wrong. Usually what it comes down to is communication.
You might be that you didn’t communicate things to begin with. In my situation, we had situations where at the time of the business, we really felt we had different goals that we wanted for the business. I thought there’s some areas that we could explore that would cost money. And he didn’t, I’m not saying one is right, and one, one is wrong.
We just, our goals were, misaligned. We had some communication issues. He was managing technical support. While I had a team managing customer support in the states, there was a lot of business traveling that was involved. And although that sounds fun overall, it got really tired to me. and to my family.
So we left on good terms and we’re still friends these days, but I think there were issues that we could have addressed earlier that maybe would’ve extended the business a little bit longer. And another experience I had was also with a software company. And again, it was very successful, just like the other one, a seven figure business.
But after a few years, It was the same situation, except he wanted to create more products. I wanted to focus on the original product and just make that product better. Again, we both found that there’s a time where we work great together, but we also had some communication issues in dealing with customer support.
And again, I’m not saying one was right and one was wrong. It was just different. The way that we handled things. I’m friends with both of those former partners, which has been great. I’ve also been in businesses where I’ve had partners in creating products and for a time it would work. But then we found out that we both have different financial and time commitments.
This person had a lot of time to work on products. And I, at the time I didn’t have much bandwidth or much time at all to work, on it. And that was on me. And he also had some financial commitments that he needed to take care of, which would take him away. And he was really hoping that this would product would replace income that he was doing, which unfortunately it didn’t.
So again, I’m friends with him as well, but it’s important that you looking back, that you talk about those things before actually getting into a partnership. And that’s what I wanna share with you today. Now I’m currently in this situation where I’ve recently invested in a business where I have a business partner, I’m a minority owner.
I have a medical niche marketing company, and I purposely wanted to be a minority owner. I was not ready to do the day to day. And in this situation, he had the experience in this particular niche. On my behalf, I had experienced the marketing and some of the connections that he wanted to enter this market.
Now I did have an opportunity to purchase the whole business if I wanted to, but I really wanted to keep this partner around because he also had past clients. He had relationships with, it would allow us to create new business opportunities as well as he was gonna manage the customer support, which currently I didn’t wanna get involved with.
Now so far, it’s gone. Great. And I think it’s because I’ve learned the lessons of past business relationships of which I wanna share with you guys today. I’m also in a situation currently where I might be taking on a new business partner, but I’m still not sure if that’s the direction I wanna go. So here are some questions that you need to ask yourself before deciding to bring on a business partner.
The first question is why, do you want a business partner? Is it because you just don’t have the time? You don’t have the experience and you’re looking for a partner who has both those, maybe you don’t wanna deal with the customer support, and you’re looking for partner to handle that for you. It’s also important though, to also look at it from their end.
What is their expectation of you? Are you just there to have the idea? And then they ha are the ones responsible for. Executing on the India. It’s important that also that you have divvy up the work equally and that can be involved you. And if the business partner is doing 90% of the work, and maybe you’re doing 10%, even though you’re really busy, they might have resentment.
The way that you can avoid that is to talk with a partner before you decide to form a relationship. So again, first question, ask yourself, why do I want a business partner? Starting a business is not easy. As I’ve said several times on this podcast, you’ve gotta be able to wear different hats.
You’ve got to be able to know a little bit about everything about your business. And to be honest, no, one’s gonna work harder on your business than you.
The second question you need to ask yourself is, are you comfortable sharing the decision making or are you someone who you’re the end all be all? If that’s true and you don’t like it, partnership may not be good for you.
Another question you need to ask yourself is, are you willing to take on liability or are you gonna share liability? Businesses have risks. As I said, you could get sued depending on what you’re going into. Are you comfortable with that? It’s important that you discuss those things with your potential partner.
So here are some questions that you need to ask with your potential partner, really have a heart to heart. Number one is what do you both hope to get out of the business? Why are you going into this business? What solution is this business? Suic? Make sure that you have aligned mutual goals. Is this like a side gig for you, but perhaps with your partner, this might be the only way that he’s gonna be able to bring home money.
That’s a lot to ask. Number two is how much time do you have? What is each person’s role going to be? Let’s say you’re a busy doctor. And as I said, maybe you can only devote 10% and the business partner is gonna evolve 90%. As I mentioned, if your business partner is performing 90% of the work, they might be expecting 90% of the money instead of 50%.
So again, expectations need to be managed before entering any relationship.
How will you be communicating is another question you need to ask. Currently my business partner is in Asia and I’m in America. We have to schedule a Zoom call once a week, and that’s our primary communication along with Skype and email, who will be making the decisions. My partner is involved in the customer support.
I’m not involved, I’m involved in bigger things and that’s what we hashed out. And these questions that I’m sharing with you are really the questions I talked with my potential business partner at the time now business partner that we hashed out over the series of several months.
Next question you need to ask is who’s involved with the finances. There should be a shared bank account. It’s important that both of you be able to track where the money is going. Money is number one in terms of problems, peop problems that a business has. And if only one partner has aspect to the finances you’re looking for trouble, it’s also imported on a side note to determine how much is each partner gonna be investing into the business.
In my share, I basically bought into the business. He was not contributing any capital.
It’s also important that you have an exit relationship involved what’s gonna happen when you dissolve the business who gets what? And then what are the percentage of finances that each partner is gonna get?
Another question you need to ask is… And you don’t like to think about it. What happens if one of the partner passes away or is incapacitated, who gets the business? Is it your spouse? You may need to have a clause written where if the partner perishes that the spouse would not inherit part of the business.
And I’ve seen situations where that wasn’t told and the spouse who didn’t have any, really any knowledge about the business suddenly became a partner. ANd that could cause a lot of issues as well. It’s also important to talk about when you’re gonna receive profits. Are you going to leave the money in the bank? Are you gonna take a salary? All those questions need to be identified.
Now, if it sounds like I’m going the direction that you to hire an attorney to help form your business partnership. You’re absolutely right. All of the questions I’ve discuss. Need to be in the contract. I’ve done handshake contracts before, and that’s where you get in trouble.
You really need to find an attorney who can make sure that your expectations and his or her expectations are met and that’s the best way to go about it.
Another question we need to ask with the help of attorney is to determine what type of business structure you wanna have. Is it gonna be a partnership? Is it gonna be a corporation? Is it gonna be a limited liability company?
So to sum everything up, it’s important that you have a business partner who can compliment your goals, your skills, you have weaknesses where they have strengths and vice versa. That’ll give you your best chance for a successful business.
Make sure that you have open communication, you manage expectations at the beginning. So there are no hurt feelings at the. it’s gonna be important that your values and your goals align with your business partners, that you have similar problem solving abilities, and be able to come to consensus when determining the big issues.
And when it’s time to end the business that you identify an exit strategy for each of the partners, having a business partner can be tremendous, but managing those expectations are moi importante to allow you to have a successful business and to keep moving forward.