How Well Do You Know Your Business Partner?

Posted on December 28, 2019 in Business Partners, Money & Finance

This just in from the annals of Business Partner Horror Stories.

Imagine going into work one day and your partner doesn’t show up.  Calls to his home ring and ring with no answering machine picking up.  Calls to the cellphone get sent straight to voice mail.  No response to your emails.  This goes on for several days. Then, the phone begins to ring.

But it’s not your partner.

It’s the creditors of your business.

And you learn that enormous sums of company funds have been transferred to his personal account.

That’s what happened to Bob Petty of Dallas, Texas, as reported in the Dallas Morning News last Wednesday.

Small business owners are among the world’s true optimists.  They are imbued with this wonderful confidence that their particular business venture will prosper without question.  The believe that people who come their way are to be trusted immediately, implicitly . . . that the relationship is about trust.  So they put trust first, and business second.

But maybe the order should be reversed:  business first, trust second.  For if business had come first, many entrepreneurs would have found — with just a little digging — that something was “rotten in the state of Denmark”.  That their potential business partner was not who he presented himself to be.  Remember the playground?  Where one kid said he could do wheelies for 300 yards on his bicycle, and the others said, “Prove it”?  The bragging kid had to prove he could do it in order to maintain his credibility.

Similarly, you will want your potential partner to do the same.  Have a good enough credit rating so that we can get appropriate financing?  Prove it my showing me a credit report and tax returns.  Have a clean, no-bankruptcy past?  Prove it by letting me do a background check.  If Bob Petty had said, “Prove it,” he would have found a string of unpaid debts in his partner’s past.

So which scenario would you rather face?  Trust, first; business, second; get taken to the cleaners, third?  Or business, first; angry and awkward emotions, second; and a sound, healthy business of your own (sans partner), third?

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