Are you thinking of teaming up with another party to establish a business?
Although most businesses are sole proprietorships, you have a strong case for wanting to form a partnership. Research shows partnerships fuel innovation and drive revenue generation. They also make starting a new business easier, since the partners can pool resources and raise adequate startup capital.
However, business partnerships don’t always go according to plan. You’ve probably heard and read countless stories of partners who fell out.
The truth is it takes a lot to make a business partnership work and last. If you’re looking for expert advice on how to have a successful partnership, you’ve come to the right place.
Read on!
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Common Goals, Values, and Interests
When you’re looking for a partner, be it a person or a corporation, the first thing to keep in mind is your goals and interests. What do you want to achieve with this partnership? This will lead you to a partner who has similar goals and interests.
For example, let’s say you’re looking to establish a local manufacturing plant that will help entrepreneurs in your community make products at home instead of outsourcing manufacturing overseas. Since the cost of setting up the plant is high, you want to bring in one or more partners to share the cost.
You may find several potential partners with the financial capacity, but if they’re purely profit-minded and don’t share in your goal to make local manufacturing more accessible to small entrepreneurs, it won’t be long before conflicts arise. Since you don’t have a common goal, they may advocate for higher service prices, thus pricing out the local, small businesses you’re trying to support.
As such, take time to assess the goals, values, and interests of any potential partner before making a deal. If they don’t align with yours, it’s better to keep looking for a new partner than court trouble.
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Complimentary Qualities
When you’re a sole proprietor, you get to take care of every business function, from marketing to recruitment to financial management. Unfortunately, this means you’re taking on tasks that you’re ill-equipped to handle. Yes, you can bring in some employees to take over some specific functions, but wouldn’t be nice if you had a partner who has the expertise to handle those tasks?
That’s why one of the keys to a successful partnership is finding a partner who compliments your qualities. If you’re good at product design, it would be of great help if your partner is good at sales and marketing, for example.
Having similar professional attributes isn’t in itself a bad thing, but there’s always that adage of too many captains sinking the ship. So, if you’re both very good at product design, what are the odds you have different ideas on the same? A difference in ideas can be a recipe for conflict.
Partners with complementary qualities are far more likely to form a strong team, much to the benefit of the business.
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The Right Business Structure
When you form a business partnership, there isn’t any obligation to make it legally binding. Fruitful partnerships have borne of a gentleman’s word or a handshake.
However, why leave everything to trust when you can seal the partnership and make it legal? The law allows people to form partnerships: commonly a general partnership, a limited partnership, and a limited liability partnership.
A registered partnership provides various levels of liability protection, but at the heart of it is a partnership agreement that spells out the duties and responsibilities of each partner. This way, there’s more motivation for everyone to keep their end of the deal, and if there’s a breach, the aggrieved party can find legal recourse in court.
Keep in mind that conflicts will always arise in any business partnership. Having the right legal structure will not only minimize the risk of conflict but also provide an avenue for an amicable resolution.
Be sure to find a business contract law firm to help you draw partnership agreements that meet your needs.
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Expectation Management
A famous quote goes, “if you expect nothing from somebody you’re never disappointed.”
Well, there’s a lot of truth in the quote, and it will work wonders if you apply it in your relationships. Unfortunately, in the world of business partnerships, there will always be expectations.
Sometimes expectations will be met. Other times they won’t. That’s the nature of any partnership, but what matters most is how those expectations are managed.
Does failing short of partner expectations lead to disappointments and resentment? You need to learn the art of expectation management.
Every partner needs to embrace the fact that not all expectations will be met, and that’s fine. As long as the business is on the right course, there’s no cause for alarm.
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Open Communication and Transparency
Communication is central to the success of every business partnership. The partners must always be ready to share crucial information in a timely fashion so that everyone is on the same page.
Poor communication among partners typically leads to mistrust. Yet, trust is the foundation of every business partnership.
In a world where data rules, it’s crucial that there’s transparency around how it’s collected and shared. Withholding key data from your partners will only lead to a partnership that’s shrouded in opacity.
Strike a Successful Business Partnership
There’s a lot that goes into making a successful business partnership. However, it’s important that partners, at the very least, have shared goals, can communicate openly, and learn how to manage expectations. And, your partnerships need to have legal backing.
All the best in your partnership and stay on our blog for more entrepreneur advice.
