Five pearls of wisdom you should try before jumping into a business partnership venture

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Five pearls of wisdom you should try before jumping into a business partnership venture

All too often, business owners start a joint business venture based on friendships and very little planning as to how they will really work together. It’s not surprising that over 50% of partnerships fail within three years, and when they do, the ripple effect can be very powerful and may turn into a highly destructive tsunami.

Could this happen to you?

Yes. A bad partnership venture shows no mercy,

All too often, you will hear stories of business partnerships and joint ventures that implode, with stories of theft, family interference, lack of commitment, control issues and lack of effective  planning, to name a few. As a result, people have lost money, family and reputations.

Check out these pearls of wisdom to help you figure out whether a partnership venture is the way forward and what to consider before making the BIG commitment.

1 Make sure you are the right fit for each other

Talk to people who’ve been involved in partnerships that went disastrously wrong, and most of the time, they will tell you that they didn’t share the same values. For example, a business partner who values innovation may eventually be at odds with someone who values consistency.

You don’t need to have the same values, just ensure they are complementary. Otherwise, you will not fit together as a partnership.

Whether your values are aligned is one of five foundations we recommend you check out before you think about moving forward.

The Five Foundations of Successful Partnerships:

  • Values
  • Philosophy (core organizational beliefs/character)
  • Commitment (assets, resources, extent/boundaries)
  • Trust
  • Culture (the way we do things around here)

Ensure these are aligned. If they are not, think twice about going ahead.

The Five Foundations of Successful Partnerships e-guide is available FREE to download from www.partnershipstoolbox.com.

2 Align your expectations about working in/on the business

If you don’t consider who does what, why and the value of their contributions to the business, resentment can creep in quickly and undermine goodwill.

Business owners may go into the partnership:

  • Expecting to measure commitment and performance by time spent in the business – people who use their technical skills to carry out the content of the business (self-employed ‘job task’ mindset); or
  • As business developers, happy to be out there bringing in the work and/or being the face of the business (business owner mindset); or
  • As investors – main interest in profits (investor mindset)

If you are not aware of your partner(s)’ intentions up front:

  • The person spending their time working in the business venture may not appreciate the value of the partner working on the outside, building the business, especially if the work is costed by the hour and there are limited resources, so it feels like only one partner is doing the work.
  • The business developer may abuse the goodwill of the person focusing in the business and treats them like an employee
  • The investor risks being drawn into unwanted conflict and hands-on involvement.

Align partner commitment and activity to achieve your business goals. Create a healthy respect between investment, business generation and implementation.

3. Consider the full set of skills and expertise needed to manage the partnership

Business owners go into partnership because they either share or value each other’s skills sets. They are coming from ‘technical skills’ backgrounds e.g. tradies, IT specialists. Business planning, administration and financial skills are initially considered secondary to the excitement of being able to increase products or services into the market place.

After the initial honeymoon period, the cracks in the business model start to appear and if not addressed, may become major fractures.

In any successful business, there are four categories of skills sets/qualities:

  • Entrepreneur (the visionary)
  • Manager (systems, decision-making)
  • Technician (the technical skills)
  • Administration (support)

Generally, people identify with one of these and act accordingly. However a combination of qualities is required within the same person for specific tasks/actions. A sole trader may work across all four persona in one day, but one will be their natural set point.

If the partners don’t have strengths in any of these qualities, consider how these can be acquired (additional partners, outsourcing or employees) BEFORE you get started.

4 Check out the alternatives to a partnership venture

Who’s the boss?

Business owners are used to independence and for a partnership venture to work, they must give up some ground of control.

Why then choose to work with a business partner(s)?

Would it be better to hire employees with the skills set you are looking for?

Or buy in external expertise?

If the partnership is to provide a financial investment, is there another way?

A partnership might not be the right solution for you.

If you are looking at a partnership venture, you must be prepared to give up some autonomy in the space you are working together in. But not to the point that ‘nobody’ seems to be in charge or that the other person is perceived as the boss.

Create boundaries before you start. Decide on systems for decision-making and communication. Don’t bypass this process in the interest of keeping the flow, because at some point, this lack of planning will bite back.

5 Plan how you will manage your partnership venture

There are three levels of planning business owners should consider:

  1. How your organisation will be structured legally
  2. A business plan for the partnership venture
  3. A governance overlay plan for the venture

Even if business partners have goals, many fail to work out how they will oversee the partnership.

A handshake is not enough.

Even if business partners have goals, many fail to work out how they will oversee the partnership.

To achieve success requires:

  • Transparent communication
  • Policies and procedures
  • Clear roles and responsibilities
  • Articulated decision-making process
  • Three-year plan
  • Risk management
  • Sound and transparent financial management

If you fail to plan, you plan to fail.

In this short presentation, we gave five pearls of wisdom to consider in preparing for a partnership venture that will last.

  • What if you could work through a process to work out whether a partnership is the right way to go?
  • That will assist you and your prospective business partner to discover whether you are the right fit and on the same page?
  • As well as help you to plan what and how you will manage your venture?

The Triple “P” Partnership Planning Package

A customized program to plan your business partnership venture right from the idea to implementation.

Benefits:

  • A process from concept to agreement that engages partners in the planning and explores how the partnership will work
  • An opportunity to check out your partner and their expectations
  • Mitigate risks and future problems you wouldn’t have otherwise considered
  • A neutral facilitation process that allows partners to be themselves
  • Options to plan for organizational systems change.

What you get:

  • Initial conversation to identify your partnership planning needs
  • A tailored program to work with prospective partners to explore the need and opportunity, clarify expectations and boundaries, plan how the partnership will work over the first three years to achieve agreed goals
  • A strategic plan with business goals, performance measures and priorities for success
  • Policies and procedures for the management of the partnership venture
  • Optional additional support for combining systems and resources and managing change.

To find out more or to start now, contact Pat Grosse on +61 (03) 9005 5889, email pat@springboardtrainingsolutions.net, or book a conversation at http://www.bit.ly/tce.

This program incorporates The Partnerships Toolbox resource package– further information available at:

www.partnershipstoolbox.com

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