I‘ve heard that business partnerships are like marriages. They require constant development, and a prenup. As someone who’s had business partners I can tell you that’s not far from the truth.
Once you’ve found that special someone the following 7 steps should have you on your way to starting the relationship on solid ground, give you room to develop, and provide the security you need to thrive.
Pick the “Right” Person, Not the “Like” Person
It’s not uncommon to see partnerships built around friendships, and sometimes those partnerships are wildly successful. This unfortunately is the exception.
Partnerships built around friendships can turn into huge disasters when you begin mixing personal friendships with the best interests of your business. Most people don’t want to loose a best friend and a business, but with “buddy” partnerships it’s likely you’ll loose both.
Picking the right person for the job should come first. If they are not personal friends it will be much easier to have those difficult conversations in the future if things aren’t going in the direction you’d hoped.
Define Roles Immediately
Defining roles early in a partnership is crucial for continued success of the partners. Early in a business venture it may seem okay to define roles vaguely (“Jim is taking on operations, and I’m taking strategic design”), but quickly you will find that if too much falls into the gray area you’re going to have problems when one of you feels the other isn’t meeting expectations.
Be clear, concise, and detailed in your role definitions. And be sure you are planning for what your roles will look like now, and in the future when your business is (hopefully) much larger.
Have a Written Agreement
This may seem overly “official” for some, or that it shows a lack of trust, but having a written agreement between partners is imperative.
Not only does it clearly state what is expected by each partner, having a written agreement gives you something to fall back on when there are questions months or years down the road about what was agreed upon.
Think of it less as a legal contract among partners, and more of a resource to ensure everyone stays on track as the years go by and memory fades.
Communicate Often and Effectively
The number one killer of partnerships is lack of communication. When you pick a business partner, make sure you feel that person is someone you can communicate openly and honestly with. If there are barriers to your communication your chance of success is not likely.
Many a partnership has gone the way of the Dodo bird because the partners either stop communicating, or are communicating ineffectively. Open lines of communication are a must.
Evaluate the Situation
There needs to be consistent and systematic review of how the partnership is operating. At least once a year you should go over what is working well, where there are opportunities, and what needs improvement…not only with the business, but between the relationships of the partners as well.
Don’t Fear a Restructure
Don’t be afraid to restructure if something isn’t working. This doesn’t mean that the partners go their separate ways, it could just mean redefining roles, or resetting expectations.
Play to the strengths of each person, and as long their isn’t a feeling that one partner is being abused, there is nothing wrong with restructuring to match business needs with each person’s strength. And over time you may find strengths change.
Plan for an Exit
Make sure you have a plan in place for the discontinuation, or drastic change of the partnership. There are many reasons partnerships cease to exist that have nothing to do with failure, and they need to be planned for.
Think of it as a back up plan for life’s little changes. If “Jim” wins the lottery and moves to Mexico, you should know exactly what will happen to the business, partnership, and operations because of such an event.
Partnerships can be an extremely rewarding, and value adding experience for your business. A well run partnership can help your business achieve levels of success often unattainable by only one person. But, like any relationship, be sure you begin your partnership with a solid foundation and a plan for development and future growth.