Like a marriage, a business partnership often begins with enthusiasm and high expectations -- only to end in acrimony and legal proceedings. It's important to know as much as possible about a potential partner, including how his or her finances and family life may affect the business, before signing on the dotted line.
Here are some questions to ask before deciding if partnering is a good idea:
1. What do I need from a business partner?
You should look for a business partner who brings something different to the table than you do. If you're creative, maybe you need a more detail-oriented partner. If you have money to invest in the business, you may want to look for a partner with access to a market, or with great connections. Or if you're shy, you might need a good "people person" to balance the equation. "If they're similar to you, it might be more comfortable, but it may not be what you need," says William M. Moore, founder of the Moore Firm in San Diego, a law firm that serves entrepreneurs. "You need someone who complements your skills and personality."
2. What is your potential partner's financial situation?
It is important to have an understanding of someone's financial status and commitments before getting into a venture together. "It is tough to ask what they are currently spending on a house or in payments to an ex-spouse, but someone's prior financial commitments shape the decisions they will make in the short term," says Gregory Kratofil, an attorney and shareholder with the law firm Polsinelli Shughart in Kansas City, Mo., who specializes in small business interests. "If he has large outstanding obligations, but says he can get by on $35,000 salary, it is a red flag."