Avoid rude awakenings

Before getting involved with a new business partner itís always important to run every possible kind of check on them. Discovering that you are ëin bedí with someone whose moral, ethical or commercial stance is seriously different from your own after the business relationship develops can lead to a very rude and expensive awakening, says solicitor Joanne Sanders of Manchester firm Glaisyers.

Top of the list of things to look into more closely are creditworthiness, the ownership of claimed assets and past business performance, she stresses. Information about an individuals standing gained from former colleagues, employees, suppliers and customers can be equally revealing.

ìWhen a promising deal is on the table there is a strong temptation to rely on intuition, enthusiasm or instinct when forming an opinion about the other party - but ambition can influence your better judgement. This can be a serious mistake,î says Joanne.

ìIf one of the parties discovers weeks or months later that a new associateís attitude toward, say, statutory outgoings, fair pricing, company entertaining or treatment of suppliers strikes the other as being less than wholesome and honest, a parting of the ways is often inevitable. More start-up businesses fail because of disputes between the founding shareholders than any for other reason.

ìThe solution is simple,î she advises. ìTake the time and trouble to thoroughly investigate anyone you plan to go into business with, financially and personally. Putting a business together - with a little money and a lot of enthusiasm - is the easy part. Taking it apart again when things go wrong after a few months or a couple of years trading can be time-consuming, tortuous and very, very expensive.

Joanne Sanders lists the main stumbling blocks as;

Real or imagined inequality in the distribution of work and responsibility
One partner receiving ëperksí to the detriment of the other
The ëWhatís yours is ours, whatís mime is my owní attitude to company assets and new business gains
Interfering spouses
Extravagance based on the premature presumption of success
Similar, rather than complimentary, attributes and skills.

ìIn a phrase,î she concludes, ìmy advice is a paraphrase of the old adage ëmarry in haste, repent at leisureí. If two or more people are going to run a business successfully over a period of years, or even decades, itís essential that they get to know and understand each other well before the doors open. Partners unexpectedly discovering each otherís flaws and shortcomings when theyíre already trying to run the business is a recipe for financial disaster.î