How to Know if Partnership in Business is Right for You
Ready to enter a partnership in business? Here’s some solid advice to help you make the right decision
Why Independent Executives enter Partnership in Business
Partnering with other executives who are also building their independent executive business can lessen some of the challenges if you find the right partner(s). Working on a more regular basis with other executives can provide the support and desire to be part of a team that tends to be human nature. As a company executive, you are used to a variety of interactions, relationships, strategic conversations, collaborative work with others who have complementary skill sets, and more. You lose some of that as an independent, beyond the clients you work with. You also gain some complimentary skill sets to offer your clients. As you build your business with the right partner, he or she can bring in skills you do not have, allowing you to expand the number of services you can offer your clients.
Types of Partnership in Business
The arrangement you make can be as simple as a referral partnership or as formal as the formation of a legal partnership. The more common arrangement is somewhere in the middle. The executives share the same company name, meet on a regular basis, work together on business development, and split some shared costs, such as marketing.
Starting off with a referral partnership is a great way to test the waters and see how you work together. It can be structured, with regular meetings involving a handful of executives with varying expertise and a single target market. For example, an executive who works primarily with startups is not the best person for an ongoing referral arrangement if your target market is companies $20–$100 million in size. Some executives have a niche client base, whether by design or circumstance. Find out the details before extending the invitation; you never know where it may lead. Cerius started with a group of consultants who met weekly at a local restaurant. Through this informal partnership of referrals, they got to know each other’s strengths. Some were great at finance and operations, while others had strengths in sales and IT.
A partnership doesn’t need to be long-term. Sometimes, it may just be necessary for a particular engagement or client. Sometimes you will have great success, and other times, you may end up saying, “Never again.”
Deciding Whether Partnership in Business Is Right for You
Take it slowly and approach it as you would any other business relationship. Do your due diligence. Look for red flags indicating potential issues. Also, look for opportunities and how the situation can be leveraged for all involved.
If you decide it is a good idea, make sure you find the best match to your own values, goals, leadership style, and skills. Because once you become partners, it is vastly more difficult to undo the partnership than it was to create it. Following are seven points to take into account to avoid a bad partnership.
- Trust
This is first on the list for a reason. Bottom line: do you trust this individual with your personal bank account? If the answer is “no,” think twice. As partners, every dollar you spend proportionately affects your own personal checkbook. There are a number of variations of partnerships in this industry. Find one that gives you the benefits you need, but perhaps doesn’t involve the commingling of funds.
- Friendship
If the person is a good friend, make sure that his or her goals, values, and responsibilities are aligned with yours. Don’t assume that just because you get along as friends, they are. Take a look at the potential partner’s personal life and how stable it is. Personal problems are difficult and can easily complicate somebody’s professional life. If there is any doubt, don’t do it.
- Trial run
Select a person you have experience with at work, at a nonprofit, or on a project. You should know if he or she is a team player and how he or she reacts in difficult situations. If you have no experience with a potential partner at all, do a trial run for a specified period of time before finalizing the partnership.
- Varied strengths Make sure you and your partner’s strengths are in different areas. If you have two people who are good at sales and no one who is good at executing on an operational level, it will be more challenging than you think. It is much better to bring someone in who will compliment your strengths. In order to grow profitably, keep some balance.
- Balanced responsibilities Both parties need to agree up front what their responsibilities are in the partnership and stick to them. If one person keeps trying to take over and do everything or ends up doing very little, then the partnership will start to unravel and feelings of resentment will fester.
- Money Just as in marriage, money is always one of the major potential problems in a business partnership. Therefore, agree in the beginning how you will use the funds you have and how the profits will be distributed.
- List ownership Decide up front how your lists will be owned, managed, and divided, from marketing lists to contacts to customer base. Have a plan for how these will be cultivated, respected, and divided should one partner decide to leave.
Why is all of this so important? Because a great business can be severely damaged by a bad partnership and never reach its full potential. Starting a business and/or a partnership is an emotional experience. When you are performing due diligence, set your emotions aside and make sure everything lines up and has the potential for staying aligned.