How I pick a business partner

A reader asked me: Tom, with all the opportunities coming your way, how do you decide who to partner with? What a question. The answer has two parts, because a partnership is always two things: what the business is, and who the person running it is. I test both, in that order.

Test one: can it scale?

Let me give you a real example. A young founder in the UK built a home-services company doing something nobody would call sexy: cleaning rain gutters. It rains a lot over there, the trees drop their leaves into the gutters, and somebody has to clear them. He built a serious operation around it: flyers printed by the pallet and hung on door handles across the country, an office booking the appointments by phone and online, crews in fitted-out trucks, and each cleaner doing five to eight jobs a day.

Here is what I was actually examining. After he pays the cleaners, the flyer printers, the people answering the phones, and everybody organizing the schedule, a healthy margin is still left over. And the mechanics of the business could multiply. When I looked at it I told him, half joking: you are this successful in spite of your organizational skills. The demand was there, the model worked, and it had not even scratched the surface.

That is the first test, and it is very key for me right now: if you bring real organization into this business, if you define every function, automate the right steps, and make sure everybody knows exactly what they are doing, can it do several times the volume without the overhead growing at the same speed? If the answer is no, I do not care how charming the founder is. If the answer is yes, we move to test two.

Test two: the person

Before I came in as a partner, I sat down with him and we spent hours on one subject: what are your goals? What are your purposes? What are you trying to get done in life? If this works, what is the money for?

Here is a trick I will hand you for those conversations. You cannot always nail down the positives, because someone can say anything and you cannot verify a dream. But the negatives you can trust. When people start talking about their negatives, their fears, the things they will not do, I promise you those are true. So I listen very carefully to both halves.

What I wanted to see was hunger with a reason attached. He has a young family, children he is building a life for, causes he wants to support, and a picture of a bigger future that keeps him showing up early. That matters, because running an expansion is a field you have to plow every day, and some days you will ask yourself: why did I do this? It was comfortable back there. If there is no reasoning behind the effort, no future pulling on the rope, a person will quietly stop pulling. He will not even notice he stopped.

Expansion feels like chaos

One more thing, because it is the part almost everybody gets wrong. When you try to expand something, chaos shows up: invoices, customers who do not pay, cleaners who get sick, customer-service fires, the million things that go wrong in any business on earth. It is inevitable.

And here is the instinct it triggers. People look at the mess and think: if it is this chaotic at our current size, doubling will kill me. And without ever making a conscious decision, they start holding the business down. They throttle their own growth to protect their sanity.

That is exactly why organization has to come in with the growth. Financial controls so you always know where the money is. Collection lines. Computerization. Hiring lines, training lines. Simple steps, but when five or six people are drowning in particles and you put order in, this calm comes over the whole company, and suddenly double the volume feels lighter than half the volume used to feel.

So that is the answer. Is the business scalable if order is brought into it? And does the person have a future he is willing to plow that field for? Watch for both, and I will tell you something: it works.