How to Find a Business Partner and Vet Them Properly

How do you find a business partner?

Decide what you need a partner to own, then look where people with that skill already are: former colleagues, your network, industry associations, local business groups and online platforms. Vet candidates with references and a time-boxed trial project, then sign a written partnership or shareholders' agreement before you share ownership.

This guide is for anyone looking for a business partner, whether you are opening an agency, a shop or a consultancy, or starting a venture-backed company. Where the advice differs for startups, we say so.

Business partner, cofounder or investor?

People use "partner" for very different relationships. Be clear which one you want before you start asking.

Our view: share ownership only with someone you need for years. If you need a skill for a few months, hire or contract it. If you mainly need money, an investor or a loan may fit better than a partner. For startups, what is a cofounder explains how a cofounder differs from an early employee.

Decide what you need before you look

• The gap. Name what your partner must own that you cannot: sales, operations, a trade skill, engineering or finance.
• Money. What each of you will put in, and whether the business needs more than you have.
• Time. Full-time or part-time, and from when. Mismatched hours breed resentment; in YC's 2021 co-founder matching data, "79% of founders care that their co-founder can commit a certain number of hours."
• Goals. A business you run for decades, one you sell in five years, or one you grow with outside investment. Partners with different end points pull in different directions.
• Location. Whether you need someone on site every day. Many startup founders do not: in the same YC data, "50% of founders don't care where their co-founder is located."

Where to find a business partner

1. People you have worked with. Former colleagues, managers and clients are the strongest candidates, because you have seen how they work under pressure.
2. Your network, with a specific ask. "I am looking for someone who has run operations for a restaurant group" gets better introductions than "anyone interested in a business".
3. Your industry. Trade associations, conferences, suppliers and customers are full of people who already understand the problem.
4. Local business communities: chambers of commerce, coworking spaces and small-business meetups.
5. LinkedIn. Search for the experience you need, or post what you are building and who you are looking for.
6. Cofounder platforms, if you are building a startup. YC Co-Founder Matching is free and reports "over 100K matches made"; CoFoundersLab has a free tier and a $29/month Premium plan. Our CoFoundersLab alternatives guide compares seven options.

Most cofounder platforms are built around technology startups. In our view, if you are opening a traditional business, your industry and local network will usually be more useful.

How to vet a potential business partner

Treat it as seriously as a hiring decision, because it is harder to undo.

1. First conversation: why this business, what success looks like in five years, and what would make each of you walk away.
2. Money: what each of you puts in, how long you can each go without income, and any personal debts or obligations that change how much risk you can take.
3. Track record: what they have built, sold or run, and evidence you can check.
4. References: speak to people who have worked with them, including someone they disagreed with.
5. Working style: how fast they decide, how they handle conflict, and how they communicate when things go wrong.
6. A trial project, described below.

Questions worth asking directly:

• How should we split profits, and when do we pay ourselves?
• What happens if one of us wants to leave or sell?
• Who has the final say when we disagree?
• Which parts of the work do you not want to do?
• Tell me about a business relationship that ended badly. What happened?

Run a trial project first

A trial shows how you work together before either of you shares ownership. One Hacker News commenter who had used YC's matching "a few times" suggested a "temporary 3 day trial" of building something together before committing. For a traditional business, the equivalent might be delivering one client project together, running a market stall for a month, or preparing a joint business plan and bank pitch.

• Keep it real: use actual client or customer work, so the trial tests the partnership under real conditions.
• Time-box it, from a weekend to a few weeks.
• Agree in writing who owns what the trial produces, and whether anyone is paid.
• Review honestly: did you both do what you said, and how did you handle the first disagreement?

Choose a structure and put it in writing

In the US, the Small Business Administration describes partnerships as "the simplest structure for two or more people to own a business together." Its comparison table lists partnerships with "Unlimited personal liability unless structured as a limited partnership". Limited liability partnerships "give limited liability to every owner", and for LLCs the same table says "Owners are not personally liable".

Whatever the structure, write the terms down. Of a limited partnership agreement, the SBA says: "It's widely recommended to create one to protect yourself and your business, even if your state doesn't mandate it." A partnership, operating or shareholders' agreement should cover:

• What each partner contributes: cash, assets, time and skills.
• Ownership, and how profits and losses are split.
• Roles, authority and spending limits.
• How decisions are made, and what happens in a deadlock.
• Pay: salaries, drawings or profit distributions, and when they start.
• Who owns clients, IP and the business name.
• Exits: how a partner leaves, how their share is valued and bought, and what happens on death or disability.
• How disputes are resolved: mediation first, then arbitration or court.

For a startup, add vesting on everyone's shares so a partner who leaves early does not keep a large stake. Our founders agreement template covers the startup version clause by clause, and the equity split calculator helps you agree the numbers.

Red flags in a potential partner

• Pushes to skip a written agreement "because we trust each other".
• Vague about money: what they will put in, or what they owe elsewhere.
• Will not give references, or references do not match their story.
• Wants equal ownership for part-time commitment, with no date to change it.
• Pressure to sign quickly.
• Goals that do not match yours, such as selling in three years when you want to run the business for decades.

If you are building a startup and still looking, BiggMate is a cofounder-matching platform in early access, designed around pitch-first profiles and introductions only when both sides opt in. Signing up is free; the FAQ has the details.

Frequently asked questions