Questions to Ask Potential Business Partner
Partnership disputes are usually about the things nobody wanted to raise while the idea was still exciting: who owns what, who decides, how much each person needs to earn, and what happens when one of them wants out. These twenty-two questions put that conversation before the paperwork rather than after it. They cover contributions and equity, vesting, decision rights and deadlock, previous ventures and how they ended, personal financial pressure, and the terms of an exit. Have this conversation before you register anything.
The questions
Open any question for the note
What are you putting in, and what do you expect to own?
Why ask it
Get both halves stated on the same day, out loud. People arrive with wildly different arithmetic on how cash, an idea, code already written, and future work convert into ownership, and discovering the mismatch a year in is what produces the ugly conversations.
How much do you need to take out each month, and how long can you go without it?
Why ask it
This is the constraint that quietly determines everything else. A partner who needs four thousand a month from month one is running a different business from one who can go a year unpaid, and neither is wrong as long as it is known before the plan is built.
What does your financial position look like: debts, dependents, savings?
Why ask it
An awkward question that prevents a common failure, where one partner starts taking decisions driven by personal pressure. You do not need statements, only an honest picture of the runway and the obligations behind it.
Have you been a partner or a director before, and how did those end?
Why ask it
Ask for the full list, including the short-lived ones. The pattern is what matters: partnerships that ended amicably, in silence, or in a dispute over money. Then verify it, because company registries and court records are public in most jurisdictions.
Has a business of yours failed, and what happened to the money and the people?
Why ask it
Failure is common and not disqualifying; the handling of it is the signal. Listen for whether staff were paid, whether suppliers were left short, and whether they can explain what they got wrong without the explanation being entirely about someone else.
Are you doing this full time from day one, and if not, when?
Why ask it
One partner working evenings while the other works weekends is where resentment starts, and it starts early. Get a date and a trigger, such as a revenue figure or a funding event. An indefinite intention to go full time eventually generally means never.
Which decisions do you want to be able to make on your own?
Why ask it
Far more useful than a conversation about equal partnership. You want explicit lists: what each of you can spend, hire, sign, or discount without asking. Partners who never divide this end up either asking permission for everything or discovering commitments after the fact.
What do you want me responsible for, and what would you rather I stayed out of?
Why ask it
This shows how they see you, which is not always how you see yourself. It also surfaces the areas both of you want, usually product or sales, and the ones neither of you wants, usually finance and administration, which is the gap that sinks small companies.
How do we break a tie?
Why ask it
Two equal partners with no tie-break mechanism can deadlock the company completely, and the resolution is then a court or a sale. Options include a casting vote by domain, a third director, an outside adviser, or a buy-sell clause. Choose one now, while you agree about everything.
What happens to equity if one of us leaves in the first year?
Why ask it
Without vesting, a partner who departs after four months keeps their full stake and the person still working owns half a business with an absent shareholder. Standard practice is a cliff and a vesting schedule, and the conversation is far easier before anyone has anything.
What do we each get paid, and when does that change?
Why ask it
Unequal salaries can be entirely fair, for instance where one partner has other income. The trouble comes from leaving it undefined. Fix the numbers, the date they are reviewed, and what has to be true for them to rise.
What would you do if we ran out of money in month eight?
Why ask it
The answers separate people quickly: borrow personally, raise outside money, cut to the bone, get a job and continue at nights, close it. You are checking that their instinct is one you could live with, because that decision arrives in a hurry.
What is the smallest outcome you would still be happy with?
Why ask it
One partner wanting a solid business paying two salaries and the other wanting a company that either becomes large or dies is a genuine incompatibility, and it does not show up until the first offer or the first plateau. Ask early and believe the answer.
When would you want to sell, and is there anyone you would not sell to?
Why ask it
Exit expectations differ by years, not months. Also worth knowing whether they would refuse a competitor, an overseas buyer, or private equity on principle, since that constraint eventually belongs to both of you.
Who else has a claim on your work: an employer, a non-compete, an assignment of intellectual property?
Why ask it
Employment contracts often assign inventions made during employment, and a previous co-founder or an old company may have a live claim on what you are about to build on. This is worth checking properly with a lawyer rather than settling on assurance.
Is there anything in your history I should hear from you first?
Why ask it
Bankruptcy, unpaid judgments, director disqualification, tax debts, licence problems, and criminal convictions all affect what the business can do, particularly its ability to borrow or hold a licence. Volunteered early, most of these are manageable. Found later, they are a trust problem.
What are you actually bad at?
Why ask it
A specific admission such as follow-up, detail, or difficult conversations tells you what you will be covering. An answer framed as a strength in disguise, or the claim that they are a perfectionist, tells you the self-assessment cannot be relied on.
What would make you walk away?
Why ask it
Better asked now than discovered in a crisis. Real limits sound concrete: a partner going behind their back, an ethical line, a family situation, a year without pay. It also gives you permission to state your own, which is the harder half.
How do we end this if it stops working, and who buys whom out?
Why ask it
The mechanism matters more than the willingness. Valuation method, notice, payment terms, and what happens to the name, the clients, and the code all need writing down. Partnerships without an agreed exit tend to end through the most expensive route available.
What happens if one of us dies, becomes ill, or has to stop?
Why ask it
Without an agreement, a deceased partner's shares can pass to a family member with no interest in the business and no obligation to sell. Cross-purchase arrangements and insurance exist for exactly this, and it is a cheap problem to solve early.
Who is our lawyer and our accountant, and are we each getting independent advice?
Why ask it
One lawyer cannot properly represent both of you on the founding documents. Paying for separate advice on the partnership or shareholders agreement is a small cost, and a partner who resists it is telling you something about how future disagreements will go.
What do you need from me that you have not said yet?
Why ask it
A good closing question, because the honest answers arrive at the end of a long conversation rather than the start. It may be about money, about credit, about a title, or about wanting a decision to be theirs. All of that is easier to hear now.
Testing a Partnership Before You Form One
Practical guidance for the conversation itself
Before the Conversation
Write your own answers first
Go through the list and answer every question yourself, in writing, including the ones about money and exit. People who have not done this end up negotiating against whatever the other person proposes rather than from a position, and they concede things they later resent.
Do a small paid project together first
One real piece of work with a deadline, a client, and money attached reveals more than three months of planning meetings. Watch what happens when something goes wrong in it, because that is the behaviour you are actually buying into.
Check them out properly
Company registries, court and judgment records, and professional licensing bodies are public in most places. Speak to two people who have worked with them, ideally including one former partner. This is normal diligence, not suspicion, and a serious person expects it.
Decide which incompatibilities are fatal
Different working hours are survivable. Different intentions about selling, different tolerance for debt, and different views on paying people are usually not. Knowing your own list keeps the conversation from becoming a search for reasons to say yes.
Having the Conversation
- Put money first rather than last. Enthusiasm is cheap, and the equity and salary discussion is the one that predicts whether this works.
- Ask for specifics whenever an answer describes an approach. "What did you do the last time a client refused to pay?" is worth ten answers about values.
- Write down what you each agree to during the meeting and send it the same day. Memory of a founding conversation diverges within weeks.
- Notice how they handle a direct disagreement in the room. This is the closest preview you will get of a board argument in year two.
- Do not settle it in one sitting. Two or three conversations spread over a few weeks catch the changes of position that a single enthusiastic evening hides.
Where Partnerships Fail
Equal shares with no tie-break
A clean fifty-fifty split feels fair and creates a company that cannot decide anything once the partners disagree. Either divide decision rights by domain or bring in a mechanism, and do it while the split still feels academic.
No vesting on anyone's stake
The scenario to picture is a partner leaving in month five holding half the company. Vesting protects whoever stays, which at the outset might be either of you, and that is the argument to make if it is resisted.
Trusting a friendship to cover the paperwork
The written agreement is not a statement of distrust; it is the thing that lets a friendship survive a bad year. Partners who insist paperwork is unnecessary between friends are the ones who later rely on their own recollection of what was agreed.
Ignoring what you already saw
Chronic lateness, invoices they never chased, an ex-partner they will not discuss, a story that changed between meetings. These rarely improve once money and pressure arrive, and they are almost always visible before the agreement is signed.
What the Written Agreement Has to Cover
- Ownership split, with vesting and a cliff, and what happens to unvested shares on departure.
- Roles, decision rights, and spending limits for each partner, plus the tie-break mechanism.
- Assignment of intellectual property to the company from every founder, including anything built before formation.
- Salaries, expense rules, and when and how they get reviewed.
- Exit terms: notice, valuation method, buy-sell rights, restrictions on competing, and what happens to clients and the name.
- Death, long-term illness, and incapacity, with insurance where a buyout would otherwise be unaffordable.
- Each partner taking their own legal advice before signing, and both signing before the business starts trading.