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The Importance of Researching Reputations Before Going Into Business With A Person


Before deciding to go into business with someone, it is extremely important to learn as much about that individual as possible. Just as you would do proper diligence on a potential financial investment, doing diligence on your potential business partner is a critical step, as it could have similarly far-reaching financial, emotional, and legal effects if you do not.

Financial effects. You are about to invest massive amounts of your own valuable personal time in a business endeavor. Make sure the person you are about to do this with is credible and worth that valuable time by first doing your research on them.

Not only is the opportunity cost high if you start a business and forsake other meaningful work, but if you don’t go into business with the right person, there could be other financial implications. Future customers could research your partner, resulting in potential loss of business. Negative press online is never helpful when trying to make a sale, whether in the form of actual press, or former co-workers, employees, or customers saying negative things.

Separately, if your partner is not straight up or responsible when it comes to financial management, you also could lose a great deal of money if this person has anything to do with managing your business finances. Finally, legal fees could be something you face as a business if you wind up getting sued because of your business partner and his or her unethical practices.

Emotional effects. Owning or working in a new business with others is an extremely personal experience. You inevitably will spend countless hours together building and refining your business model, pitching to potential customers and investors, and generally building your company. Owning a business is a roller coaster ride in and of itself, and if you aren’t working with someone who is even-keeled, somewhat like minded, and supportive of you, you could be in for a world of pain.

A quick internet search can pull up some of the good, the bad, and the ugly on your new roller coaster seatmate. Be very careful and inquire with your partner if you see any signs of negativity coming from friends, co-workers, or former customers in forums or in general online. Chances are decent that if one person feels strongly averse to your partner, you might as well. If you have the opportunity to interview former business partners, co-workers, or managers of your potential partner, do so. You may learn things you did not expect.

Emotions run high in a start-up environment, so be as certain as you can that you are going to be working with someone who is worthy of being in the foxhole with you (and who will have your back in that fox hole!).

Legal implications. If your future business partner has ever been sued or has been associated with a lawsuit, this is a warning sign, and information that can be found easily online. Be sure to learn exactly what the case was about, how it was resolved, and what level of involvement your partner had in it. A tiger doesn’t tend to change his stripes. But also note that some people are only peripherally involved in a suit but can still be named in that suit.

Give your partner full opportunity to disclose details of the case before judging him or her yourself. You don’t want to be involved with someone whose business practices could ever have been construed as sketchy. The chance that this behavior will continue when you work together is high, and potential customers researching you and your partner when they wish to work with you will find the same information you have. This could impact their decision to work with you.

You and your partner really need to consider getting all skeletons out of the closet before engaging with one another, as there is a decent chance those will be revealed at one point or another anyway. You will save yourselves a great deal of pain by doing so up front.

In short, it is extremely difficult to tell when you first meet someone in an interview if they could be a right fit to work in a business closely with you, never mind run one together. You are both on your best behavior and seeking to leave a positive impression with one another. The same goes for an old friend whom you know well and trust. They might be a great friend but a horrendous business partner.

One step in determining if this potential partner could be a good fit is in doing a simple internet search on their name. At a minimum, it will show you what your future customers and employees will see, which is a good gauge for you. If you are comfortable with these things being seen by others outside of your business, that is a good sign.

But be sure not to leave your diligence at this one step – learn about your partner’s financial management practices, personnel management strategies, and overall work ethic before engaging fully. The try-before-you-buy method is a great strategy to employ – consider staying at your current job but starting the business on the side together so that it is a low-risk situation if it doesn’t work out. A few months working together should give you a decent sense for many of the things you need to know about your partner (some of which you couldn’t find online) before fully engaging.


Cara Aley is a freelance writer who covers a wide variety of topics from managing your online reputation to health and wellness.

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