Finding business partners that share similar markets to you can help you leverage your business, increase business profits, and expand your customer base. The problem is many business owners are scared off by the statistics - at least 50% of partnerships fail in the first 2-3 years! That’s enough to make any business owner decide to tough it out alone.
Most partnerships start off as a great idea between two people. The logistics are determined, agreements signed, and the partnership begins. Often, it’s smooth sailing for a while, but eventually the cracks begin to appear. Trust breaks down, priorities change, businesses grow apart. What if you could ensure your partnership would weather any storm and become a successful and enjoyable adventure?
Learning from business partnerships that have worked (and failed) is a good place to start. Here are nine top tips from those who formed successful business partnerships and learned some valuable lessons along the way.
1. Do you have a similar vision and values?
This should be the starting point for any partnership – business or otherwise. Do you share the same vision for the future of your businesses? Are your values aligned? Too often, this conversation is glossed over, yet your vision and values are the heart of your business.
Sit down with your potential partner and put it all on the table. What are your work styles? How do you cope under stress? How do you treat customers? Where do you see the business in five, ten years or more? Sharing similar values is imperative and a few basic questions in these early stages can save you a lot of heartache in the long run.
2. Ensure you have complementary skill set
It’s easy to fall into the trap of attracting a partner who is just like you. You’ll quickly find you’re both great at the same half of the business and the other half will suffer. What you need is someone who has a different skill set to compliment your own. That way you won’t be stepping on each other’s toes and can each apply your strengths to grow the business.
3. Share the work equally
A common downfall of business partnerships is when one partner alleges to be putting in more effort than the other. There can be vastly different perceptions of the value of time and resources in business, so this needs to be discussed at the start and reviewed regularly.
Explore the value of the partnership, the commitment expected from each, the return on investment for each person’s input and the resources required. Set up terms of agreement in writing and be prepared for it to change.
4. Keep open channels of communication
Another contributing factor in the breakdown of partnerships is the lack of effective communication, which is often a symptom of poor planning. The signs are usually there early on, in the way you handle emails, phone calls and messages. It could simply be that you each have different styles of communication. That can still work, if you can put those differences aside and agree on what will work best for the business.
5. Agree to be transparent
Openness and honesty are critical to every successful partnership, yet transparency (or lack of) is a big sticking point, one that ends many partnerships. Withholding important information at any stage can prove divisive. Even if you have known each other for years, it’s still advisable to do background and reference checks before entering a partnership, just as you would for an employee. Your terms of agreement should also include the need for transparency in every area of the business.
6. Plan for slow, steady growth
Don’t move your business faster than you can manage. It’s easy to get excited in the early stages and that’s great! But if you forge ahead too quickly you can miss important guideposts along the way that are imperative to your success. Start with a solid plan. Invest in some external, professional support if you need it. Be sure to also plan for change. Life (and business) never runs in a straight line!
7. Evolve your partnership
Keep your business partnership growing. Invest in education, do regular reviews, enlist a business coach, and explore new ideas. Ensure your partnership is evolving and not becoming stagnant.
8. Have a dispute and exit plan
Nobody starts a business with a plan to end it any time soon. You do however need to discuss and formalise an exit plan for when that time comes. An exit clause in your agreement defines what happens to assets, intellectual property, profits, debts, clients and other considerations. Seek legal advice on your partnership agreement and include a clear dispute resolution clause. Knowing you have a feasible exit plan offers you and your partner peace of mind.
9. Do you really need a partner?
It’s a question worth asking! Think about why you want to enter a partnership. Ensure it’s not for emotional reasons, or that someone influential has ‘sold’ you the idea that your business would be better off if they were a part of it! Explore other options. Is there an alternative to a partnership that could help you achieve the outcome you want?
A healthy partnership should create something that is mutually beneficial for both parties; a synergistic relationship which is greater than the sum of its parts. If you don’t see this value in the partner you’re considering, look around at other options.
Bartercard brings businesses together
Getting your business model and systems right are essential for success. Strategic partnerships and collaborations are just one way of attracting new customers. For more ideas on how to bring more customers into your business and increase your cash flow, download the helpful Bartercard eBook: 8 ways to attract new customers.