The Perfect Partnership
Being a part of a business partnership can be analogous to being in a marriage. Just like with a marriage, if you are in a business partnership with someone whom you are incompatible, your business will not blossom and flourish like it should. Both business partnerships and marriages require an investment of time, energy and finances to be successful. They also both require trust, communication and adaptability.
A quote by James Cash Penney summarizes both relationships best: “Growth is never by mere chance, it is the result of forces working together”. So, what is the key to making a partnership work? I believe the key can be summed up in three fundamental components -
Foundation, Mutual Commitment, and Teamwork
“Know who you are getting into business with”
Foundation
All epic relationships, including business partnerships, have one thing in common- a solid foundation. Below are some basic things you should do to ensure that you are starting with a foundation that will last.
Vet your potential business partner(s). Know who you are getting into business with. It will be important to know if your partner has owned a business before and whether or not that business was successful. You might consider talking to partners and clients associated with the previous business to gain perspective on their experiences. You want to understand what it is like to do business with this person.
Find out if your skills, knowledge and abilities are complimentary. Ideally, you want a partner that compliments your strengths and fills the gaps of your weaknesses. For example, if you are an extreme extrovert and love being the “front person”; you may consider a business partner that prefers the behind the scenes work and draws energy from making sure that all the I’s are dotted and the T’s are crossed. You should amplify and enhance one another’s positive attributes. In general, you should make each other better.
You want to make sure that your prospective business partner is someone with whom you have open and robust dialogue. Good communication is a critical component of any successful relationship. You need to be comfortable sharing ideas, asking questions and even challenging assertions when you disagree. The best way to find out how you will communicate with each other is to have several conversations about views, values and individual attributes prior to committing to the partnership.
Clarify values. You will also want to be sure that you and your partner share the same or similar values around “how to do” business. A value can be as simple as “the customer is always right”. A partner who has a more rigid or inflexible approach, might struggle with this value. Values can also dictate how much or how little risk a person is willing to assume. For instance, you wouldn’t want to find out afterwards that you’ve entered into a business partnership with a person who believes that leveraging all available credit is the best and fastest way to grow the business when you have a far more conservative tolerance for the amount of debt incurred. Additionally, if aboveboard practices are at the heart of your core values, make sure that your partner isn’t someone who will do anything to make a buck - including playing fast and loose with legal and ethical boundaries. These types of fundamental differences in “how” to do business can ultimately be a showstopper if as business partners, you aren’t able to find common ground.
Discuss roles and responsibilities. Make sure that you share the same views on roles and responsibilities within the business. Without this type of clarity, one or more partners can quickly become disenchanted with the partnership if they believe the other is not pulling their weight or contributing to business in an equitable measure. When you are starting the dialogue of whether or not to go into business together, you might not have a solid vision of what the business will be. However, it is still very important to be transparent about how you each generally envision the partnership working. For example, it might be agreed upon that one partner is the “idea person” and business manager/operator, while the other partner is more of a financier. In this instance, it would be important to clarify whether the financier wants to be an active part of the decision making process or if they wish to abdicate all the decisions to the business operator. Defining these broad roles and scopes of responsibility up front can save both parties a lot of conflict and heartburn in the future.
Pro Tip: For a Limited Liability Company (LLC), it is a best practice to document in writing the decisions you make about how the business will be run in an Operating Agreement. This ensures that future disputes can be settled quickly and efficiently.
“Any healthy relationship should be able to survive disagreements”
Mutual Commitment
Perhaps you are already in a business partnership. If so, no worries — you can always start with affirming or re-affirming the level of commitment of each business partner. Mutual commitment is a reciprocal dedication to the business partnership and the business. This is where the concepts of loyalty, allegiance and fidelity come into play. Each partner should always act in the best interest of the business and consider how their actions will impact their business partner. For example, withdrawing funds from the business account for personal use without consulting your business partner would not be in alignment with this principal. If you have already vetted your partners, clarified one another’s values and discussed roles and responsibilities, the mutual commitment component should be much easier.
Mutual commitment also encompasses the concept of knowing how to disagree. Any healthy relationship should be able to survive disagreements. You should not expect to always see eye to eye with your business partner or to approach every situation from the same perspective. However, you should be committed to talking through your differences to achieve an optimal solution. It is also helpful to agree, upfront, about the boundaries for disagreements. For instance, if your business partner is a family member, friend or spouse- you would want to make sure that safeguards are in place to prevent business and business disagreements from disrupting that relationship. The last thing you want is for things to be awkward around the dinner table because of a disagreement related to the business.
You also want to ensure that each partner is meeting the commitments mutually agreed upon during the roles and responsibilities conversation. If circumstances have changed, you should revisit this conversation and redefine roles and responsibilities as needed. This helps to guarantee that things don’t go south because of a misunderstanding on either end about what is expected of each partner. An example of this would be the partner (above) that agreed that they would invest funds for the start-up of the business and leave all decisions to the other partners feeling left out of a decision to provide a friends and family discount. Or the partner that agrees to manage the day-to-day operation of the business feeling that the financier partner is not pulling their weight because they aren’t displaying enough interest in the details of the business that he/she feels they should. The majority of these kinds of misunderstandings can be completely avoided by having frequent and frank conversations about what is expected from each other.
“You should be talking to your business partner early and often about the direction of your business”
Teamwork
The Oxford English Dictionary defines teamwork as “the combined action of a group of people, especially when effective and efficient”. In order for this to occur, members of the team must be able to rely on one another.
While each member of the team (or partnership) will have different roles and responsibilities, each must be able to trust that the other(s) are doing their part. In order for teamwork to be effective, the sum of the partnership must be greater than the individual contributions. Partnerships work best when the collective can leverage the best attributes and contributions of the individual members of the partnerships. Combined, the partnership should yield a total package.
Business partners should always have one another’s back. If one business partner accepts a meeting with a potential client and it is mutually agreed upon that both partners will be present, it would be a violation of this principal if the other partner was late to the meeting, left earlier or generally gave the appearance of disinterest during the meeting. Likewise, if one business partner is experiencing a personal hardship or crisis, they should be able to count on the other partner to step up to the plate and take on additional responsibilities for a period of time.
Finally, make sure that you stay aligned on vision, strategy and desired outcomes for your business. You should be talking to your business partner early and often about the direction of your business. Remember — sustainability and growth don’t happen without a plan. Always plan as a team. Even if your partner is a “silent partner”, alignment on strategy and desired outcomes is still a must.
Let’s face it — whenever you share responsibilities, resources and accountability with someone else, there will be challenges along the way. However, if you stay true to the basic principles outlined in this article, you might just find that business partnerships can be rewarding in ways that exceed your expectations.
Don’t just survive your business partnership but thrive, right along with the business that you create together.
I’d like to invite all of you reading this to share in our journey. Please stay in touch with us by giving us a follow on LinkedIn, Facebook, and Instagram. If you or someone you know is in need of a service we offer, feel free to get in touch with us.