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Part 4: How to Select a Business Partner
The process of selecting a business partner is going to vary significantly for each and every individual. Compatibility will depend heavily on your personality type and future aspirations. Be sure to talk about these items when you are evaluating potential candidates. If you’re an architect, I suggest teaming with an engineer. If you’re an engineer, I suggest teaming with an architect. A multi-discipline firm will be able to cover a larger portion of the project life cycle. Some engineers are skeptical of this because they think having an architect in-house limits your ability to solicit other architects for work. That is simply not the case. As you will learn in this series, becoming niche specific is advantageous to your business. With that in mind, make sure to evaluate your potential business partner in regards to their particular market strengths.
As you are evaluating candidates, you will begin to narrow down your list. If you find yourself trying to decide between two or three, I suggest asking, “Which person are you most comfortable with?” Most likely this trait is not just felt by you, but by everyone who interacts with that person. That type of “feeling” isn’t something you can fake. It is specific to that person, and honestly, some people just have that gift. The “it” factor weighs very high on my evaluation scale when hiring. It is something you cannot explain, and is even harder to quantify.
Without knowing the dynamics of your ideal work environment and your specific personality, let’s look at some key factors that apply to everyone:
1. You need to be compatible.
This is probably the most obvious, but it’s also easy to get wrong. There are several services that offer personality testing if you are looking for a more robust analysis. To me, the best litmus test is to invite your prospect out to dinner/drinks at least two or three times. Invite their significant other as well, if they have one. I’m not advocating that not having a significant other is a bad thing, however it is a plus; if the prospect has a significant other, you can get a real-time look at how that person interacts with someone they see every single day. Do they respect that person? Do they put that person on a pedestal? Do they make back-handed comments about that person? Do they act annoyed by that person? These are all questions you could be able to answer by the end of three nights out. The answers you get will help you determine how that person will feel about you when they spend every single day with you and how they will act when you are not around or within earshot. By the end of the third night, you’re going to know if you are compatible with this person. You will know if you like them, dislike them, or are indifferent. Make sure not to rush your decision. I know this sounds like a dating service, and as cliché as it sounds, when it is right, you will know.
2. You need to make the best choice, not the gutsy choice.
Think about this: if your business fails and someone does a postmortem, what would you hope they say? “Oh, he picked a clown for a business partner and made some really off the wall decisions, no wonder he didn’t make it.” Or would you prefer they say, “Wow. She picked the perfect business partner and it was a product of a poor economy and unfortunate circumstances. It’s a shame she didn’t make it.” Pundits like to glorify bold and gutsy business owners. The problem with that glorification is that those business owners have probably already failed once or twice with a business venture. If they haven’t, then call them the exception, not the rule! When you have a few years under your belt as a business owner and you want to branch out and do something “off the wall," by all means do it. But to take on unnecessary risk early in the process is a poor business decision. This concept goes back to the list you created in Part 1 of this series. If your family is depending on you, make the best decisions possible. It’s not just your well-being you’re putting at risk.
3. You need to have different skillsets.
A great way to know if you have differing skillsets is to learn about that person during your first three nights out. You can learn a lot by just observing someone. If you are more introverted and they seem to be more gregarious, then seemingly that is a positive. Try your best to understand as much as you can about their personal situation. This includes everything from friendships to financials. Look for opportunities to learn about how your potential partner handles specific issues, for instance something like their finances. If a person is lax in their personal finances and budgeting, they will most likely be lax in business finances. If a person has a huge network of personal friends, they will most likely have a huge network of business contacts. Starting a business should be made on the most sound and solid decisions you can possibly make, and this requires a detailed knowledge of a potential business partner that goes beyond workplace relationships. Getting these little details out of a prospect will allow you both the opportunity to operate and grow a business more easily than two like-minded people. People who have the same skillsets often critique or argue on how certain tasks should be done. If you get two people with different skillsets then you will both have the opportunity to master tasks and functions of the business, rather than stepping on each other’s toes. Another problem with like-minded business owners is that typically they get hung up on one part of the business, and something just as important gets neglected because nobody is paying attention.
4. You need to be industry fit.
What I mean by industry fit is how your firm will be viewed by your potential clients within your targeted industry. Do you have the necessary experience? Does your firm have the experience? When you create a firm, you are effectively stating that your experience is zero. I don’t care if you personally have 35 years of experience, your firm still has zero. This can make things difficult when you are bidding for projects, as potential clients will need confidence in your ability to manage a specific project. If your targeted industry is something related to a trade, this can become even more difficult. In order to avoid potential catastrophe, you’ll want to have a business partner with experience related to that particular trade. Similarly you also don’t want to hire employees without this experience. The only workaround for employees is hiring greenhorns. That won’t work with a business partner. Your clients want to know from the top-down that you have the relevant personal experience to do the work. Clients – especially in the heavy industrial and manufacturing arena – don’t have time for people getting up to speed. At the same time, your young firm can’t afford to blow an opportunity to land a signature client. Selecting a business partner with the same industry fit will help mitigate these issues.
5. You need to have a bullseye framework
I mentioned earlier that being a niche-specific firm is a smart business move. This comes from personal experience, but also a concept developed by Justin Mares and Gabriel Weinberg in their book Traction: A Startup Guide to Getting Customers. The main concept in their book relates to marketing traction channels, but applies to marketing in general. The theory is to limit the number of traction channels you chase. This allows a firm to focus on three specific channels (means of attaining customers), rather than a shotgun blast approach where you spend a little time everywhere. Narrow your focus, maximize your efforts. Limit the industries you are in and the types of clients you are soliciting. By doing this you can track results, build predictable backlog, and retain customers.
This is important because the more clients you have calling you means the less outbound marketing calls you have to make. Make sense? When you limit your client base, you deliver better quality and better service. This keeps clients coming back. When you have a business partner, you both need to share this philosophy. If not, the main artery for revenue generation in your business gets clogged with multiple ineffective means for attracting clients. Your marketing costs go up. Your billable time goes down. You run the risk of getting bogged down with work from clients who don’t pay and who don’t have an appreciation for what you provide. A clearly defined bullseye framework for your company’s management is very important. I will confide to you that most engineers think the shotgun blast approach is the way to go, mostly because they haven’t thought about it from the angle presented above. When going over your beliefs and views of company direction with a potential partner, layout your case and see if it resonates. I do not recommend going forward with a partner unwilling to use the bullseye framework.
The steps I’ve laid out above are what I consider most important in selecting a business partner. I don’t like to discuss technical attributes of a specific personality because it dilutes the article and its effectiveness to resonate with the large majority of people. However, if you find yourself having some specific questions you would like addressed, feel free to reach out and email me at firstname.lastname@example.org. I would be happy to offer advice on a more detailed level specific to your situation.
Picking a business partner is like dating. When it’s right, you will know.
Don’t read publications that glorify gutsy business owners. Instead make logical decisions. I will concede that business is a game, but it doesn’t have to be a gamble. When selecting a business partner use all available metrics at your disposal to make the BEST decision possible.
The bullseye framework is the best way for a start-up to attract and retain customers. I suggest you read the first five chapters in Justin Mares and Gabriel Weinberg’s book Traction: A Startup Guide to Getting Customers.
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