Finding a business partnership that is right for you
Karl R. LaPan, President & CEO, The NIIC
Photo by Amy Hirschi on Unsplash
A business partnership can solve some problems yet create other challenges and problems. Of course, inventorying and weighing the pros and cons is a crucial first step if you’re thinking of going this route. Finding the right partner and ensuring the compatibility of the relationship is nothing to rush into, as it often comes with high stakes.
To adequately inform your decision, you need to do your due diligence paying attention to a myriad of influences and insights that can provide valuable clues into whether a partnership is viable and in your best interest.
A partnership may offer many tangible benefits for your particular business, such as:
1. Compensating for weaknesses or areas you are not the best
Maybe you lack skills or expertise in a specific area. The right partner can (and should) accentuate your positives and round out your blind spots and gaps.
For example, you may be great at marketing, but not so good when it comes to keeping the books. You may be a rockstar when it comes to customer service but freeze up at the thought of networking. This may be one of your first considerations when you look at the potential relationship holistically. Where might your business partner help to pick up the slack, better differentiate or complement what you have to offer ?
2. Greater access to startup capital
A prospective partner may offer deeper financial resources necessary to better capitalize your efforts. He or she may also have connections or a proven track record that could benefit you from a funding perspective. They may be more poised than you to attract potential investors, raise more capital to grow your business, and potentially grow faster and stronger than you would on your own.
3. Cost and time savings
A startup can be resource intensive. Having a business partner would allow you to offset some of that burden, theoretically resulting in more substantial savings than flying solo. Additionally, a partnership can mean you are more strategic and productive with your time since you’re better leveraging and focusing your limited resources.
4. Wellness and Self-Care
A partnership may yield psychological benefits. It may allow you to cut back on time spent on the office, knowing someone is invested in the business even when you’re not physically present. Work-life balance is underestimated among the entrepreneur community but critical to overall business and personal health. Additionally, the right partner can act as a sounding board, cheerleader and confidante, all of which are critical throughout the development of a sustainable business. Business builders are often isolated, lonely and feel overwhelmed by all the pressure to deliver. They often lack the tools and skills to manage the high highs and the low lows of starting, growing and scaling a sustainable venture.
Let’s take a look at some of the downsides of this arrangement:
In addition to sharing profits and assets, a partnership means partners have to contend with any losses too. This can place a burden on your finances and assets. Your business partner’s lousy decision can become your responsibility. That’s why it’s so important to enter into the relationship with a certain amount of preparedness and triggers for how to handle difficult and crucial conversations.
2. Loss of autonomy
Are you willing to answer to someone else when it comes to shared decision making? If you’ve been a solopreneur for some time, you might find the transition to be a rude awakening. Sometimes, it is a hard and difficult transition from being a Lone Ranger to being an accountable partner.
3. Future complications
You or your partner may wish to sell the business at some point down the road. This could cause tension if both parties aren’t on board with the timing or specifics of the deal. That’s why having a formal exit strategy is essential, to account for any situations that may call for the partners to move on by buying the other out, selling to a strategic buyer or winding down the business because goals, needs and performance justify the action. Having established mechanisms for dealing with potential difficult situations is paramount to long-term success.
4. Lack of stability
Even if you have a solid exit strategy spelled out in your partnership agreement, the change in circumstances could mean instability in the business. How comfortable are you with facing uncertainty? I have always believed that one essential business builder skill is managing uncertainty and approaching decision-making from a risk perspective (monitoring, managing and mitigating risk).
5. Cultural fit
Too often we take for granted that if we share similar views that are sufficient for determining a partnership is a cultural fit. The reality is that we need to look under the hood and examine our collective core values, experiences, vision to determine if our union is a real cultural fit. Don’t underestimate the power of culture in unraveling a partnership. Toxic workplaces are created by toxic people. It is well established that organizations often mirror the dysfunction of their leaders.
In short, a business partnership is a marriage. As with any strong union, it’s based on finding the right partner. Don’t rush into it and take precautions to maintain the health of the relationship by preparing for adverse outcomes before you sign on the dotted line. You can accomplish this if you and your partnership start from a place of transparency, candor and mutual respect.
In your experience, what worries you most about finding the right partner?