Running a business can be isolating – both professionally and personally – especially if you’re a one-man (or one-woman) band. There are often days where the only company you’ll keep is your computer screen and endless cups of tea.
A good business partnership will not only add value to your business, it will ensure you’re no longer alone. Partnerships offer strength in numbers and give your business the resources it needs to do things that would not otherwise be possible. As Winston Churchill said, “If we are together nothing is impossible. If we are divided, all will fail.”
There are many different kinds of partnerships – some structural, others strategic, and more often than not, both.
Partners are, simply, joint owners of a business. There can be up to 20 people in a partnership, and no matter how many, they are equally responsible for the decisions made on behalf of the business. Ideally, they share the same vision and aspire towards the same goals for that business.
For home-based businesses, partnerships can be infinitely beneficial – they provide a lifeline to the world, are a valuable networking tool, a cost-saving device, and they can allow you to grow in ways you would not have been able to otherwise.
Bill Gates believes good partnerships are key in business – “Our success has been based on partnerships from the very beginning”.
But beware – partnerships in business can be fraught with danger should they go awry. Unless there is a written agreement stating otherwise, all partners must share profits and cover losses equally. They must also take equal responsibility for the business’s activities and trading. Be sure to put in place an agreement on how the partnership operates, who is responsible for what, how to handle disputes, payments and even bust ups.
As with any agreement you enter into, it’s a good idea to get it in writing. Without responsibilities and obligations spelled out, confusion can arise, and if things get messy down the track, you have it in black and white to fall back on. To make a partnership work, trust is essential – trust in business requires a firm foundation, and this is precisely what a partnership agreement can offer.
The agreement should be written with the input of all partners and legal advice.
Partnerships take time and effort – as the American writer John Updike so wryly observed, “By the time a partnership dissolves, it has dissolved”.
Too many people enter into partnerships with friends and family with either a loosely written agreement, or none at all. The sad thing is that when things get messy, you often lose both the business and the original friendship.
Dissolving a partnership must be done in accordance with the partnership agreement (another good reason to have one!). If this is the case, be sure to seek legal advice.
The key to growing your small business into a business that is capable of doing big things is to form strategic alliances.
Carlos Slim Helu, one of the world’s most successful businessmen, says these alliances are essential for good business – “In this new wave of technology, you can’t do it all yourself, you have to form alliances”.
These alliances, or partnerships, allow your business to better serve your clients and to provide a wider range or products and services. They also help you to learn – as a partner, you gain market and business knowledge. As a result, your business will be better equipped to take on bigger clients, and your experience, your client base, and most importantly your revenue will increase.
As with any partnership, these should be with businesses that complement, not compete, with your business.
When forging an alliance, you need to be clear about the objectives of the alliance – what can you gain, and what can you offer?
As anyone who has experienced a partnership of the de facto variety will tell you, relationships take time and effort. Be sure not to spread yourself too thinly – select your alliances carefully, and nurture them.
To be sure that you are targeting the right businesses, develop a list of criteria:
• What sort of capabilities does a potential alliance need?
• Are there mutual benefits in engaging in an alliance?
• Will they add value to your business offerings?
• Can you offer value to them without compromising your own?
The best way to find such partners is to get yourself out there – attend networking events and functions, listen and learn to be able to identify who would be a best fit for your business. Be aware that any kind of partnership is a two-way relationship – you need to trust them, and in turn be transparent in all your dealings. It is always best to get it in writing to avoid conflict. And as with any agreement, legal advice is essential.