8 Components For Great Business Partnerships
Monday was a tough day. After the team of my newest company worked our tails off for six months with another startup, I had to inform the other company we were “out”.
The reason was easy: they had still not signed our contract agreement between our two companies. The implication was hard: the fallout, bad-will and impact it would have on all the client entrepreneurs we were working with.
I was also embarrassed. I had broken my own rule: never ever start working with another partner or company without an agreement in place… in writing.
After all, that is what I teach my entrepreneurs, for God sake!
Straight forward advice, for sure, but rarely followed by most entrepreneurs. Why?
The answer lies in this analogy: it’s like dating someone who is really hot! In the beginning all is going great. You’re pinching yourself to make sure you’re not dreaming. You look past their imperfections and your incompatibilities.
Then one day you realize that “hot” person ain’t so hot after all.
You look back afterwards wondering where the heck you went wrong. What were you thinking? Why didn’t you see it coming? After all, all your friends and family did, and most likely warned you repeatedly to be careful!
Eight Components to a Great (Business) Partnership
- Synergy— you complement each other’s skill sets. And you both are good at what you do.
- Respect—you trust their business expertise, and vice versa.
- Like—different than respect. I find it much, much easier and more enjoyable when I really like my business partners.
- Communication— when things are going great, it is easy to communicate and trust. But when things are not going great is where the communication is challenged most. Over-communicating is always better!
- Value—each partner understands the value the other brings. This often does not mean each partner works the same number of hours. Often this is quite different.
- Date—before you share equity or any split of company assets, make sure you play well in the sandbox together first. You can share % of sales, resources or skill sets for the first project or year before giving shares in your company.
- Agree—completed legal document before starting. If you tell yourself “I’ll get to it, later”, well, people forget what was agreed, or things change and your value is not understood by others the same way you understand it. People forget. Or opinions shift.
- Exit—think through how you will split the partnership if things don’t work out. Do this as part of your agreement, before you start working together.
In the end, Monday was not as painful as I imagined it to be. In fact, I’m glad I went through these past six months. Learned a lot, met some super-cool folks (hiring one of them), and most importantly, I’m back on track with my company and its vision.
Not bad for only six months of going down the wrong path.
Action Steps for the Week
Review your partnership. How are you guys getting along? Do you have synergistic skill sets, interests and passions?
Do you communicate clearly?
Do you have an agreement? If so, how “fresh” is it? Does it need revisiting?
In the end, it is far more worthwhile to spend the time on keeping a clear and solid agreement in place than trying to sort through the ashes of a poorly executed partnership.