Good Partners Make You Rich. Bad Partners Can Bankrupt You

Steve Jobs had Steve Wozniak. Warren Buffet had Charlie Munger. Larry Page had Sergey Brin.

Some of the most successful people in the world owe their success to the partnerships they forged.

Finding the perfect business partner is one of those fast tracts to success I love to talk about. In the case of a perfect business partnership, 1 + 1 = 3. What this equation is trying to say is that when two people join forces, that partnership’s potential success can be significantly greater than the individual accomplishments of each partner.

But while partnering is one of the fast tracks towards success and wealth, it is also one of the fast tracks to failure or bankruptcy. Choosing a bad partner can create havoc with your financial and personal life. Bad partnerships lose money, find themselves in litigation and destroy marriages.

So how do you go about finding the right business partner? Below are some questions to ask that will help you identify potentially good business partners:

• Is your potential partner honest?
• Is your potential partner humble?
• Does your potential partner have skills you lack?
• Does your potential partner have control over their emotions?
• Is your potential partner sound financially?
• Does your potential partner have good relationships with his family members? Family includes immediate family as well as parents and siblings.
• Does your potential partner treat their family members well?
• Does your potential partner have a hard work ethic?
• Is your potential partner a rule follower?
• Have you worked with this potential partner before?
• Do you know this potential partner very well?
• Is your potential partner positive, upbeat and optimistic?
• Does your potential partner have a good reputation?
• Does you potential partner have integrity?
• If your potential partner has a spouse or significant other, do you know them well?
• Is your potential partner a good listener?
• Does your potential partner have a reputation for keeping their word?
• Is your potential partner a good learner?

If the answers to these questions is yes, then you have a perfect partner candidate. If you don’t know the answers to any of these questions, do not partner with a potential partner until you do.

Here are some questions to ask that will help you identify potentially bad business partners:

• Does your potential partner have a reputation for lying? Have you caught them in even little lies?
• Is your potential partner arrogant?
• Does your potential partner cheat on their taxes?
• Does your potential partner have any outstanding tax issues or deficiencies?
• Has your potential partner ever sued anyone?
• Has your potential partner ever been sued by anyone?
• Does your potential partner cheat on their spouse?
• Do you and your potential partner have similar skills?
• Is your potential partner quick to anger?
• Does your potential partner have money problems?
• Does your potential partner have bad relationships with his family? Family includes immediate family as well as parents and siblings.
• Does your potential partner treat their family members poorly?
• Has your potential partner ever been in a failed partnership before?
• Has your potential partner ever broken any laws before – are they a rule breaker?
• Has your potential partner ever filed for bankruptcy before?
• Does your potential partner have any outstanding debts they are behind on?
• Does your potential partner gossip?
• Is your potential partner negative, downbeat and pessimistic?
• Does your potential partner have a bad reputation?
• Does your potential partner lack integrity?
• Has your potential partner ever made bad investments in the past?
• Does your potential partner have any issues with their spouse or significant other?
• Is your potential partner a poor listener?
• Does your potential partner exaggerate or have problems keeping their promises?
• Is your potential partner a poor learner?
• Has your potential partner ever broken any promises to you or anyone you know?
• Has your potential partner ever broken any promises to any of their past business partners?

If the answer to any of these questions is yes, this may not be the right partner for you. If you don’t know the answer to all of these questions, do not partner with a potential partner until you do.

Some other points I’d like to make regarding potential partners:

• Find three or more individuals who have worked with this potential business partner and ask them the above questions. This includes former partners and vendors.
• Ask your potential partner’s family members these questions?
• Who does your potential partner surround themselves with?
• Are their friends standup people or not?
• Would you associate with their friends?
• Never partner with someone who surrounds themselves with fools or people who lack integrity.

You will never know everything you need to know about a potential partner, but asking the above questions is good due diligence and will help you to better vet potential partners. Knowing as much as you can know about future business partners significantly reduces your risk. The more you know, the lower your risk. Not knowing as much as possible about potential business partners significantly increases your risk. The less you know, the greater your risk.

Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, “Effort-Less Wealth”, “Change Your Habits Change Your Life”, “Rich Habits Poor Habits” and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”