How Untrustworthy Business Partners can Doom Your Company

How Untrustworthy Business Partners can Doom Your Company

There are many good reasons for taking on a partner in your business. Whether you are seeking a new influx of cash, someone’s expertise in a particular matter or you want someone to act as a balance in decision making, and a good partner can help your business to thrive.

Unfortunately, the inverse is also true. An untrustworthy business partner can be catastrophic for your business. The difficulty comes in telling the difference between a reliable partner and one who poses a serious threat to your company.

How to determine if a potential partner is untrustworthy?

The most critical first step is to take emotion out of the equation. You might like and respect someone that you have known for years, but that does not mean they will make a good partner. Whether it is a relative stranger or a close friend, you should evaluate each candidate thoroughly. Use the following steps to help determine if someone might be untrustworthy as a partner:

  1. Do a background check. A background check provides valuable information about a person that can help you make a wise decision, but it also serves as a litmus test to determine if they have been completely honest with you. Use a quick online site, like Check People, or the dozens of other reputable sites, to run a background check and compare it with everything the person has told you.
  2. Look for signs of past financial mistakes. When someone becomes a partner in your business, their financial history will affect the credit-worthiness of your business. If they have a bankruptcy or other signs of poor money management, it is worth a conversation to understand why.  Those with less than stellar financial history are not doomed to be a lousy partner. After all, they might have learned valuable lessons from their past mistakes. Honesty, though, is an irreplaceable tool in making any partnership work.
  3. They balk at signing a partnership agreement or demand that it be modified in their favor. Having issues about fair play and trust before the partnership officially begins should be a warning sign.

Positive signs that you have found the right partner

There are some key features that successful partnerships have in common. One of the most important is that their values and goals align with yours. Finding a partner that has the same vision for the future of the company is a good starting place. If they also have the same values in how business should be conducted, then you know you are definitely on the right track.

Communication is crucial in making a partnership a success. Is this someone with which you can easily discuss new ideas? If there is a disagreement, can you both talk it through calmly and rationally? There will be times in any partnership where you disagree with how something should be handled. Great partnerships rely on being able to work through issues.

Mutual trust is also a critical necessity in a successful partnership. Running a business is often a deeply personal matter, and you should never attempt a partnership with someone whom you do not trust implicitly. You should also evaluate their level of trust in you. Does the potential partner trust not only your integrity but your knowledge and insight about the business? If so, you have an essential part of the foundation for a good partnership.

The consequences of an untrustworthy partner

As a business owner, your reputation is the most crucial asset you have. An untrustworthy partner can do extensive damage to your reputation and the reputation of your business. Given that it can take years to build a reputation for your business, you want to protect it at all costs.

A bad partnership can also lead to the creation of a toxic work environment, making yourself and your employees miserable. You could lose valuable employees because of the managerial style of your new partner, or find yourself with a less productive workforce.

Entering a partnership with someone who is unethical, or even criminal, could result in legal action against you personally or your company. Such actions often result in the closing of a business, erasing all your hard work. Given the extensive potential negative consequences of an untrustworthy partner, proceed with caution before entering into a partnership. A partnership agreement is one necessary level of protection, and it is always a good idea to work towards having enough funds to buy your partner out if necessary. If the partnership remains healthy, then those funds can remain a rainy day security blanket. If things go south, being able to buy your partner out could be the only thing that saves your business.