There may be times when someone wants to become your business partner but for a variety of reasons, you may reject that person's offer. When rejecting a potential business partner, you should do it in a way that's respectful but encouraging at the same time. Your choice of a business partner depends on the goals for the company, what kind of workers you're looking for, and if a potential business partner has the personality to deal with other employees at the company.
First mention the positive qualities of the person. If he's a previous business owner has a reputation for developing his employees and many of them became successful business owners, mention that you admire that quality in him. Or if the potential business partner has innovative ideas that helped local companies succeed over the past five years, talk about how this inspires you as an entrepreneur.
State specifically why you're rejecting the offer. If the potential business partner doesn't have enough managerial experience in business, tell her that while you like the ideas she can contribute to your company, she lacks the leadership skills that are necessary to run a business. Or if you know that the person has a history of being fiscally irresponsible with the management of funds for companies he worked for in the past, mention this to him.
Thank the person for expressing interest in the company. Also invite him or her to work in other departments of your company based on the strengths of the individual. For example, if the potential business partner is knowledgeable of legal issues as it relates to small businesses, offer him a position as a legal consultant for your company.