Should you seek out a business partner?
Building a successful real estate team starts with finding the perfect business partner. In some cases, investors may even search for a partner to help with the process of starting a business.
The right business partner will differ for every real estate entrepreneur. Some investors will prefer a passive partner while others will prefer one who takes on a more active role. Some may want a seasoned businessman or woman who brings time-tested ideas to the table, while others may prefer a newbie who is eager to learn the ropes.
Forming an ideal business partnership will depend on your management style, personality, goals, and vision for the future. You’ll want someone who shares your values, challenges you to grow, and ultimately, someone who will boost the business’ bottom line.
If you have ever found yourself wondering “What questions should I ask a new business partner?” read through our guide below before you attend your next networking event, you never know how it could help.
How do you attract a business partner?
Finding the right business partner is crucial to creating a successful deal. You will want to ensure that your business partnership will help you achieve the highest level of success possible. Luckily, there are measures you can take to attract the right partner.
Choose the right target: In order to form a business partnership can be mutually beneficial, you must consider each party’s goals. This will help you understand if your goals align and if your partnership will help you reach them.
Build a pipeline of deals: Not every business partnership opportunity will be right for you, so you should take time to evaluate all of your options. Do your research and compile a database of multiple potential business partners that can then contemplate working with you.
Build a relationship on multiple levels: The more relationships you can establish with members of a business the better. If you spend time getting to know multiple members of the business you wish to partner with, you will have an easier time speeding up the deal process.
Introduce with a shared connection: A good way to build trust with a potential business partner is through a shared professional connection or a mutual interest. Try to find a commonality between you and a prospective business partner to find a shared connection and give a better first impression.
Make terms and negotiations simple: The terms of your business partnership will help both parties understand what is expected of them. However, keeping them simple and to the point will help negotiations move quickly. Try to limit the terms and negotiations to create a respectful and professional relationship.
Finding a business partner: 15 business partnership questions
Finding the perfect business partner will take hard work, dedication, and a clear head. Keep in mind, you will be spending a lot of time with whomever you choose to be your partner, so it is crucial that you selectively weed out substandard candidates. The key is to find someone with a skill set that compliments your own. In other words, find a person whose strengths are your weaknesses. Ask every potential partner you are considering these 15 questions to get a better overall understanding of their business skills, financial history, and personal preferences:
Have you been in a business partnership before?
How do you handle a crisis?
What is your communication style?
What do you see this business looking like in five years?
Do you have a preferred exit strategy?
What is your current financial situation?
Would you consider yourself frugal in terms of spending money?
Are you a risk-taker?
How much capital do you plan to contribute to the business?
How do you expect to divide profits?
What motivates you?
What is one personal goal you are currently trying to achieve?
If you didn’t have to work, what would you do?
What do success and failure look like to you?
How much time are you willing to commit to the business?
Much like a job interview, your first topic to discuss with potential business partners should be past job experience. You need to determine how long they have been in the industry, and if they have ever worked in a business partnership before. Each of these answers will give you a glimpse into their management style, work ethic, and level of dedication. Here are a couple of business-related questions to help you get started:
“Have you been in a business partnership before?” Find out if they have ever taken part in a joint business venture. You want to know the positives and negatives from any past business partnerships so you can move forward in the most effective way. Essentially, you are asking for their past job experience and how well they worked with others during that time.
“How do you handle a crisis?” At some point in a business, there will be a time of conflict or even a crisis. Before going into business with someone, you need to know how they have handled these situations in the past. Ask what their temperament is in stressful situations and get an idea of how well they work through problems.
“What is your communication style?” Communication is key to a successful business partnership. Look not only at their answer but also at their approach to meeting with you. Are they direct about scheduling? Do they prefer text, email, or phone calls? Get to know these details now to save yourself time in the long run.
“What do you see this business looking like in five years?” After you have spent time learning about each other’s past business experience it’s time to take a look at future goals. Have you already decided what kind of business you want to run? What short and long term goals do you have for it? This is an excellent way to get on the same page before you make a concrete business plan.
“Do you have a preferred exit strategy?” What factors would lead to an inability to stay in the partnership? Answering this question will help you anticipate worst-case scenarios and decide how to proceed should anything happen. This will be important as you incorporate your business and start drafting contracts.
Next up: it’s time to gauge their money mindset. In order to find a business partnership that is successful, you need to share the same attitudes about money, or at the very least balance each other out. You also need to know who is bringing what to the table, and how profits will be split. Financial questions may not be appropriate straight out of the gate, but always set aside time to talk money before going into business together. When you’re ready, review the following financial questions with your potential partner:
“What is your current financial situation?” You both need to know what kind of capital the other is working with. This will inform how you approach start-up costs, lenders, and future investments. Inquire about their existing portfolio and any outstanding debts; and, be prepared to share this information about yourself as well.
“Would you consider yourself frugal in terms of spending money?” Spending habits impact more than just investment decisions, they also come into play when it comes to calculating operational costs. Ask if they are good at keeping a budget and if there are any spending areas they know they could improve on. You don’t need to know their day to day spending to make an informed decision, but you do need an idea of what you are working with.
“Are you a risk-taker?” There is nothing wrong with a healthy amount of risk; however, if you are working with someone who has a completely different tolerance than you, things may not work out. Find out if they consider themselves to be a risk-taker and ask for examples.
“How much capital do you plan to contribute to the business?” Some business partnerships are funded almost exclusively by one partner, where others split costs 50/50. You need to be very clear on this even before you get into the legal elements of starting a business.
“How do you expect to divide profits?” Similarly, you also need to discuss how profits (and losses) will be distributed in the partnership. As I said, it can be helpful to establish some ground rules before you begin any legal processes.
Shared values are at the core of any successful business partnership. Even if everything else seems perfect, if you have different values there will always be a disconnect when it comes to making big decisions. You need to spend time getting to know what motivates, inspires, and drives the other person before committing to a business agreement. These components will provide insight into how well you two will work together and how you will handle the inevitable obstacles of being a business owner. Try the following questions to ask a potential business partner to get to know more about each other:
“What motivates you?” Perhaps the most important factor when starting a business is identifying the “why” behind what you are doing. If you are going into business with a partner, you need to be on the same page about what motivates you. While your exact motivation could be different, you should know the driving force behind the business.
“What is one personal goal you are currently trying to achieve?” The best entrepreneurs are constantly searching for ways to better themselves. This is one of the most telling questions when trying to figure out how ambitious and driven someone is.
“If you didn’t have to work, what would you do?” While it may seem like a simple “get to know you” question, this can also reveal someone’s true passion. Ask away to learn where they would prefer to spend most of their time. Depending on the answer, it can either serve as a motivator or as a distraction.
“What do success and failure look like to you?” Get on the same page now about successes and failures and thank me later. You need to know what they consider a challenge or a win so you know how to handle these situations.
“How much time are you willing to commit to the business?” Not every answer needs to be the same between business partners, but at the very least you should know what to expect. Figure out what their preferred time commitment is, before entering a partnership where you feel like you are doing all of the work.
The most important thing to remember when finding a business partner is that the process takes time. This is not something investors should rush, no matter whether they are starting from scratch or bringing someone into an established business. If you’re asking yourself “what questions should I ask a new business partner?” then you should know that there are countless. The best questions to ask should be intended to make sure you are both on the same page. Review those listed above, and be sure to prepare your own responses as well. After all, you are not the only one evaluating the partnership.