Working with the right people is essential to succeed in the world of business. However, finding the right associates can prove difficult sometimes. With that in mind, today we answer a common question among entrepreneurs: How to vet a potential business partner?
How To Vet a Potential Business Partner?
If you want to grow your business, you’ll often need the help of a business partner. And as with any important step in business, this calls for some basic precautions.
In an interview with Armando Ehrenzweig for the Podcast de Negocios en Español, Estefan Encarnacion, managing partner of EBL Law Group, offered some tips to help businesspeople start business partnerships on the right foot.
“Ideally, you want to know the person’s financial situation,” Encarnacion explained. “Ideally, you want to find out how much money this person owes and to whom they owe it.”
Above all, according to the lawyer, “You should remember that you are in business to generate more money, not to take on more debt. That’s the whole point of a partnership.”
“That’s why you should understand this person’s finances: do they have something to back them up? What is the worst that can happen if you establish a partnership with them?”
Business Partner vs Investor: What Is the Difference?
As you look for a business partner, make sure to understand the difference between a business partner and an investor.
In the words of Estefan Encarnacion, these are “completely different roles. The investor doesn’t have any responsibilities beyond providing money and expecting returns. With a business partner, on the other hand, there is an expectation that they will fulfill certain obligations when it comes to the operation of the business.”
“If all you want are investors,” Encarnacion says, “You must structure your business in a way that makes it easy for people to want to invest in your business. With a business partner, by contrast, you share responsibilities.”
For more business law tips from EBL Law Group, read our previous blog, “7 Legal Tips for Starting a Business.”
DISCLAIMER: The material on this website is for general information only and is not to be construed as legal advice or opinion, and does not constitute or create an attorney-client relationship between you and EBL Law Group.
EBL Law Group: Business Attorneys in Rancho Cucamonga
When you choose EBL Law Group to assist you in a business law matter, you receive the benefit of personalized attention, unparalleled professionalism, and total commitment to your case.
We are located in Rancho Cucamonga, California. Call us at (909) 581-4351 for a free consultation, or fill out the contact form on this website to get in touch with our team.
