Before You Start a Business with Someone, Ask These Questions
Before getting married, people have deep—and detailed—conversations about compatibility. For instance, a couple may talk about how many kids they want to have (or if they want kids at all). They will also usually speak about how they want to raise those kids and pay for their upbringing, including how they plan on saving money for their children’s college or university tuition.
Also on the table are topics like religious beliefs and shared values. There’s a lot to talk about, but it’s the smart way to set your relationship up for success.
We need to normalize doing the same thing for potential business partners.
And what might be some of the most important topics of conversation in this scenario? Below are a few of the most pertinent questions to ask when you’re considering entering a business relationship where large amounts of money and investment are part of the deal.
Question 1: How Will We Make Hiring Decisions?
You and your business partner(s) have to be on the same page when it comes to your workforce. This includes how you will approach hiring, firing, and even disciplining employees if the need arises. You may be tempted to shelve this discussion and hope that such things will sort themselves out if the need arises, but that’s not usually how it happens. The hiring process alone is anything but straightforward.
In fact, according to recruitment statistics from g2.com, each job vacancy costs the average company $500 a day, each corporate job offer attracts an average of 250 resumes, and 63 percent of job seekers will likely reject a job offer because of a bad candidate experience.
Question 2: How Will We Deal with Bad Clients?
While the blanket terms “good” and “bad” rarely capture the full character of a client, it’s likely that if you’ve been in any type of business endeavor, you’ve probably come across some good clients, and also some bad ones. Good clients are the ones who always pay on time and are a true pleasure to work with (read: they don’t cause you any problems!). On the other hand, bad clients are those customers who constantly drain your energy, waste your time, or may even try to finagle discounts out of you or try to manipulate you into working for free (that’s the worst).
The question isn’t whether or not your business will encounter bad clients along the way, but rather what you’ll do as a collective corporate entity to deal with these energy-suckers (and sometimes financial) drains. This is when you have to sit down and answer serious questions to make sure you agree with your business partner(s), so you’re prepared when that inevitable time comes. Ask yourselves things like, Will we try to change their behavior without alienating them, hoping our efforts mold them into becoming better clients? Or will we instead choose to cut our losses—yet keep our sanity—and fire them?
Question 3: What If We Get into Debt?
Just as in marriages, finances are often a major source of conflict or contention in business partnerships. This is especially true when dealing with debt. Before entering any business relationship, you need to have a conversation about debt, even if it’s uncomfortable. You should also hash out details for tackling, dealing with, and dividing any debt that arises.
Question 4: What Kind of Culture Do We Want to Foster?
Your company culture is a crucial aspect and building block for your ultimate success. At its essence, it defines who you are as a company, which includes the everyday environment of your business (how it feels), whether people will want to work with you, buy from you, and more. Before going into business with someone, make sure you’re aligned about what values you want to be the bedrock of your culture, as well as what components you deem critical for the nature of the corporate culture you want to build.
Question 5: What Is Our Definition of Success?
Success is one of those words that is similar to the word love. It is highly subjective and can be interpreted in myriad ways. You and your business partner must agree about what your company’s idea of success is—and will be in the future. Otherwise, you’ll find yourselves frustrated when attempting to answer such questions as, How do we know when we have reached success? Will we ever sell the business? Simply put: You and your partner’s answers to these questions should mirror one another.
