I’ve made some poor decisions, I’ve made some great decisions, so in this blog I wanted to share some thoughts. I’m looking at the pros and cons, the potential pitfalls and benefits of going into business with another person and asking, is it a good idea to create a business partnership?
Working alongside a fellow business person to strengthen and grow a business can be highly beneficial. In ‘How to Choose a Business Partnership’, we concluded that in order to form a business partnership that works, each person should have a different set of skills and talents that adds to the repertoire and are complimentary to one another, whilst possessing the same values.
This way you can forge a strong partnership where business can flourish.
Protect against hostile take-overs
It would, however, be wise to ensure that you have a layer of protection in place to prevent the influences of one person in the partnership overriding the other/s and taking control.
The risk of one partner becoming more powerful than others is something to be aware of and to protect against with a legal agreement in place before you even begin with your business plan. This would form part of your traditional, limited or limited liability partnership agreement, the basics of which are covered in ‘Setting up a Business Partnership – what you need to know’.
From experience I recommend that however much you trust someone at the outset, ensure the legals are formalised first. Of course, you have no chance of getting them completed later when something blows up and in hindsight you wish you had done so.
I do believe that business can be stronger in partnership, as long as all parties are clear on the reasons why you’re in it together and follow a well-structured business plan.
Reasons to form a business partnership
As with any venture in business it is important to keep your strong reason why in focus. Having a clear vision as to what you want to achieve and why, will see you through difficult times and hard decision-making. Knowing your reason why will assist you in choosing the right person, and once you have formed an alliance, will create a bond.
So why do you want to form a partnership?
- To increase revenue
- Create new opportunities
- Fuel creativity and innovation
It may be all three of these reasons, there may be others. I would advise having the conversation with your business partner to ensure clarity on the objectives of the business in the future. Doing this will form the outline of your business plan and inevitably set you both on the path to success.
Create a business plan for your partnership
When two (or more) people come together there will likely be varying methods of implementation despite having a single objective for the business. The plan you wrote for yourself that included ‘find a business partner’, will now have to accommodate the skill set and desires of another person moving forward.
If you do not have a plan to deliver the desires of all partners then from my observations, ‘fail to plan – plan to fail’.
This is your opportunity to re-write the plan, playing to each other’s strengths, and broaden your goals. This is the first step change on the path to significant business growth.
When managed effectively and with proper consideration to each person, a business partnership can be the making of you and your brand!
I shall leave the closing words to Forbes…
‘Despite the data-backed reasons proving the power of partnerships, many are afraid to enter into these business relationships when they hear studies claiming that the majority of partnerships fail.
The reality is that partnerships can be highly successful – but they must be established on shared values, transparency and strong communication skills.’ Forbes For guidance on all that forming a business partnership entails, including leadership skills and managing alliances, decision-making, and setting up the formal agreement book some time with me and let’s have a conversation.