Oct 2018 8 Tips to ensure a Successful Business Partnership
In this article, I look at the key qualities and characteristics that successful business partnerships have. If you are considering taking on a partner or already have an established partnership, I hope this list can act as a checklist.
1. A successful history together
Many successful business partners have often been working together for someone else. It’s there, that they discover; if they have complementary working styles, how they both work under pressure and how they handle responsibility before they decide to start a business together. So it’s a great trial period.
What if you haven’t had this opportunity with a mate but are thinking about going into business? My suggestion would be to do some projects together for a year and see how you work together.
2. Create a Vision
I have coached many business partners over the years and one of the first exercises I ask them to do is to write a 5 year vision for their business and include the goals, values, structure, systems and business culture they envision. But I ask the partners to write them separately and then come together in our session and reveal what they have written. Then we go through the process of merging their visions.
It’s critical that business owners agree on their business vision. If all partners aren’t seeing the same goals, values and culture for their business, it needs to be resolved before the partnership continues. If this isn’t approached and resolved, problems will definitely occur. If they don’t have the same vision, perhaps a compromise will work, so they should talk it through and see if they are both inspired when they merge visions, if not, the partnership will not work long term.
3. Set up a legal agreement
You might be good friends that see the many benefits of merging forces, but after you have trialled some projects together for a while and are convinced this could work, complete a partnership agreement (it’s always better when done by a solicitor so everything is considered). If and when the partnership evolves and you set up a company, your accountant and solicitor are best to help you consider all parts of your legal structure and your financial responsibilities. Do it properly, so you both know all responsibilities.
4. Decide on areas of responsibility
Regardless of how small your business is, write up job descriptions for each of you, so you are accountable to each other and are responsible for the tasks that play toward your strengths. This will remove disagreement and inefficiency. In areas where neither of you have experience and aren’t particularly strong, like business administration, one of you should take responsibility for it and get some outside help from someone like a bookkeeper.
5. Decide who the Visionary is
Whenever, I work with partners in a business, I encourage the owners to decide who the visionary person is, if it hasn’t already been decided. The visionary is the partner that thinks more about the big picture and how to make it a reality. All partners may have equal shares in a company and will have their areas of responsibility but the partner that is the visionary will generally be a little more driven to guide the company to success. If you’re reading this and thinking we don’t need that, we should just stay equal in hierarchy. Please note, you will stay equal in hierarchy because you are both directors, or owners, but just have different managerial positions that benefit the growth of the business. Besides, one of you will probably be driving the business forward a little more anyway.
6. Stable Family Environment
It would be very hard for your partner to be fully focused at work if he is in an unstable personal relationship. If your potential business partner is going through a tough time, I would suggest delaying the partnership until it’s stable. If you currently have a business partner who is going through a tough time at home, give him as much support as possible (perhaps even suggest he gets professional help). Be open, honest and supportive.
The commitment levels required from each partner must be thoroughly discussed and documented in the partnership agreement and job descriptions. Set regular meetings with each other, every month or fortnight and make each other accountable. Address the issue of not meeting areas of responsibility as soon as they happen, don’t brush them aside or let your disappointment fester until the relationship starts to break down. Talk often, openly and honestly.
It is key that the partner you choose has a passion for his work and growing a business with you. If your enthusiasm far outweighs his, I would see this as a clear sign to strongly re-consider starting a partnership. The leaders of a business must set the example and provide inspiration and direction for all employees. If a partner isn’t enthusiastic about the business, its services, products, systems and the plan going forward, he shouldn’t be part of a business. If a current partner has lost some enthusiasm, obviously the first step is to talk about it and how it can be re-ignited.
Running a business with a partner can be very rewarding. Many successful businesses have more than one director or partner and maintain a harmonious, vibrant environment sharing the challenges and rewards. The key is they address the key criteria listed above and work at being a great team.