First, PARTNERSHIPS ARE HARD but here are 5 tips to successful business partnerships.
Often, partnerships are formed with two alpha leaders, who now have to agree on any number of decisions on a daily basis. The potential for challenges is a given, but even scarier is the potential for disputes that can suffocate and slow your business.
On a more positive note, a successful partnership can bring together two talents that are stronger together than they are individually. Here are 5 tips to follow so that your business partnership is a successful one.
#1 Set Expectations
First, you need to start off with clear expectations and a deep understanding of what each of you needs to be happy. Just as you would when properly vetting a new client in a professional service business, you need to have multiple conversations with your potential partner about why you are doing this. For example, what are each of you trying to achieve with the partnership? What makes you nervous? What irritates you?
Having a deep understanding of your partners’ motivations, emotions, goals and hesitations helps you to understand if there is really a match. When making the decision as to whether to launch a partnership, it’s common that these conversations may last weeks and in some cases months before pulling the trigger.
#2 Utilize an Operating Agreement
Only after getting to this point should you begin the expensive and time-consuming process of putting together an operating agreement. Your operating agreement is the legally binding agreement that gets everything down in writing and attempts to minimize the chance of anything being open to interpretation. This gets uncomfortable, as you have to plan for the worst, discuss compensation, equity and recourse in the event of breach of contract. Transparency, honesty, trust and a strong lawyer is the only way to get this done effectively. Unfortunately, we have come across many situations where an operating agreement was not completed. Often times it’s because the partners are “family” or “friends” and they feel they do not need it. No matter the circumstance, an operating agreement should ALWAYS be put in place.
#3 Open Communication
Whether we liked it or not these partnerships are a lot like marriages and just as with our real spouses, we have to invest time and energy into the new relationship. When starting out you will be working 8-10 hours a day with your new partner, the daily grind will wear on the both of you. Schedule time away from the grind to sit down for lunch, dinner, or maybe a round of golf to talk about how the business is affecting you and what you can do to improve the situation. The key to these discussions is being vulnerable and talking openly and honestly with each other.
#4 Accept different working styles
Most importantly, you must respect your partners individual working styles and personal needs. I’m a father of two kids and want to spend as much time with them as I can. This means I do my best to be home before dinner each night to get in some family time and participate in their activities. While this cuts my days shorter, I’m often hopping back online at night to get ahead for the next day and in most cases I start my day a few hours before everyone else.
My partner, on the other hand, loves to get in early and shut down once she gets home. We’ve learned this is what keeps us both balanced. It’s worked so well for us, we’ve taken this approach to our staff. Get your work done, and keep clients happy, but also take the time you need to keep your personal life firing on all cylinders.
#5 Keep company growth a top priority
Lastly, most problems can be solved if you run a fiscally smart business and never give up your growth mindset. A business that has healthy margins and is growing allows for investments in tools, support and staff that makes everyone’s life easier. A business that is barely scraping by adds exponential levels of stress that affects everything. From employee morale to recruitment, it all takes a hit.
At the end of the day, it all comes down to humanity, generosity and a true desire to keep the other member of your partnership happy. When you get these things right, partnerships can eliminate the isolation that entrepreneurship inevitably brings and has the potential to accelerate the growth and value of your business beyond what you each could have achieved individually.
If you would like more information on how to create a healthy partnership or if you would like to fix a failing partnership, call us today! Our business consultants have previously owned or currently own multiple businesses, and have forged some very strong partnerships.
Email us at sales@mcdaccginc.com or call our office (657) 258-0577 for more information.
Follow us on Instagram for more business tips by clicking here