Partners should be selected for what they can bring to the business with respect to human capital, social capital or financial capital.
Too often business partnerships are developed for all the wrong reasons:
• We’re friends, we went to school together and it would be fun to go into business.
• We have such a great working relationship in our last job; it can certainly work just as well in our own business.
• You’ve been such a great boss, of course I’d like to go into business with you as your partner.
• As a husband and wife team we will do great together in business, after all we have a great marriage.
None of these reasons, in and of themselves, is a reason to select this person as your business partner, whether a startup company or a growing business that can afford to hire staff. Unfortunately, far too often, these are still the reasons why people form partnerships.
Can it work? Yes it can. But it can only work if the partner has value to bring to the table. Unless they have value that is accretive to the business, the partnership is not only a financial drain on the business, but very often can be an interpersonal drain as well.
Consider the value partners can, and should, bring to the business:
• Human capital: Does this person have skills that are unique and important for business development and growth?
• Social capital: Does this person have connections?
• Financial capital: Does this person have capital to invest or access to capital?
Let us look at each of these capitals in more detail and frame how each can benefit the business and a partnership.
Human Capital is about skills and talent. What does each partner have that is not part of another partner’s skill set? Sure there can be overlap, but too much overlap is redundancy.
Businesses need these skills:
• Managerial experience.
• Experience with a previous startup(s).
• Content skills based on what product or service the business will offer.
While this list is not exhaustive, it is indicative of the type of skills needed to run a business. When selecting your partner(s):
• Inventory what you bring to the table.
• Define what skills and talents will be necessary to start and/or grow your business.
• Identify where the gaps are between your skills and the needed skills.
• It is within these gaps that the “job description” of your partner resides.