6 Ways to Build a Successful Partnership
A partnership can be the make it or break it moment for many businesses. If done right, it can produce great growth and results. However, quite often a business partnership will end badly and not only ruin the business but relationships as well.
There are many important factors that need to be considered when choosing your business partner and addressing these issues can help establish a successful partnership.
1.Shared vision
The first and maybe the most important conversation with a potential partner should be about expectations for the business. It is crucial to understand what exactly each partner wants out of the business. Multiple conversations regarding expectations and goals will only prove beneficial in the long-term. There are many questions you should ask, such as:
Why are you doing this?
What are you trying to achieve?
Where do you see this business in 5 years? 10 years?
Aligning your goals at the outset can help ensure the business is going in the right direction and future conflicts are avoided.
2.Define roles and responsibilities
Choosing a business partner with complimentary skills can prove to be very beneficial. This allows you to divide up roles based on each partner’s strengths. Utilizing each partner’s strengths in the correct area can result in greater growth. This can be a strategic way to give each partner their own domain but also to identify weak areas of the business that can be outsourced. Having clear roles and responsibilities for each partner will also limit room for future disagreements. In addition, clearly assigned roles and responsibilities can increase confidence amongst the employees of the business.
3.Dispute resolution
Disagreements are bound to happen in any partnership and as such, dealing with them immediately and effectively can save your business large amounts of money and time. Something should be put in place to decide how any disagreements will be handled. Often times, its best to set up a regularly scheduled sit down. Consideration should also be given to including an arbitration clause in the partnership agreement. This allows an outside 3rd party to determine the outcome if the disagreement cannot be resolved in-house.
4.Buy outs, dissolution and exit strategy
With the reality that often times partnerships will not work out, it is important to include buy out and dissolution clauses in the partnership agreement. In the event that one partner wishes to leave the business, a buy-out clause can contain agreed upon terms to make the process easier. Similarly, a dissolution clause can contain terms for splitting up the business.
Discussing and agreeing upon an exit strategy in advance can prove to be the difference in walking away from the business venture with something versus nothing.
5.Communication
Regular and effective communication with your business partner is critical to the success of your business. A strong successful partnership is based on open and honest communication. It would be a good idea to arrange for a regularly scheduled sit down bi-weekly or monthly. This provides a platform for open discussion to review current projects, provide feedback and discuss possible changes for the future.
6.Get the partnership agreement in writing
Regardless of who you are partnering with, a partnership agreement is a must. It is a legally binding document that contains all of the agreed upon provisions. It will neatly set out in writing each partner’s roles/responsibilities, decision-making policies, buy-out clauses, how profits are shared and the exit strategy to name a few. This will ensure that the partners are on the same page and also help provide clarity in challenging times.
It is critical to lay a strong foundation for a successful business partnership and these are some of the issues that need to be addressed in order to do so.
