7 Ways to Prevent a Business Partnership From Going Bad
Business partnerships can be very valuable to your success. A single entrepreneur can’t possibly consider every flaw in a given strategy, and can’t constantly come up with creative new ideas. A partnership, on the other hand, opens the business to twice as many ideas, twice as much strategic thinking, twice as many potential deals, and twice as much initial work. The dilemma is that such a partnership might also open a company to twice as many disagreements and twice as many chances for future problems.
Partnerships have a lot of advantages but a lot of downsides as well—especially as the company develops beyond startup mode. Still, there are a handful of strategies you can implement to prevent your partnership from going bad.
1. Pick the right partner
Your choice in a business partner can mean everything. Going into business with a friend or a spouse can seem like a good idea at the time, but if something goes sour with the personal side of the relationship, the entire business could crumble.
Going into business with someone aggressive and who’s enthusiastic about taking risks might seem like a good complement to your more conservative nature, but radically opposing viewpoints will ultimately clash in the long run. Choose someone reliable, dependable, and reasonable, with good business acumen and a true commitment to the longevity of the business. It isn’t an easy decision, nor should it be.
2. Set expectations up front
Dispel any preconceived notions or fundamental disagreements as soon as possible. Work with your partner to set certain rules and expectations before you get into the day-to-day responsibilities of running a business.
For example, how are you splitting business ownership? How are you handling hiring? What happens if the two of you can’t come to an agreement on a given decision?
The more of these subjective questions you can answer in advance of the company’s formal creation, the better. In many cases, it’s advantageous to have a partnership agreement drafted, to keep you both accountable.
3. Benefits should be mutual
Ideally, both you and your partner will stand to benefit from the partnership. This should go without saying, but eventually, some partnerships drift toward being two individuals each seeking what’s best for him/her. When you make a decision for the company, it should always be in both parties’ best interests.
Accordingly, when you first select a partner, you shouldn’t choose someone substantially more or less experienced than you. Instead, you should choose someone right around your skill and experience level. That way, you’ll both stand to benefit more or less equally from the partnership.
4. Clients come first
This is a golden rule for partnerships. Eventually, you’re going to get to an issue where you fundamentally disagree. In these situations, it’s important to go back to what truly matters—the clients. Does one decision favor the clients more than the other with similar risks and expenses? If so, that’s the decision you should make.
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Your clients are the reason your business exists in the first place, and they’re responsible for supplying your business with revenue. Rather than thinking about what’s good for you or good for your partner, remember to acknowledge what’s especially good for your clients.
5. Have mutually trusted third parties
When you start a business partnership, it’s beneficial to have a third party on the outskirts of your business who’s neutral and familiar with both of you. This person should have ample business experience and a level head, as he/she is going to serve as a kind of mediator in certain situations.
For example, if you and your partner have fundamentally different opinions on where the business should go, you can discuss the matter with the mutually respected (and neutral) third party to get an unbiased outside opinion on the subject.
Having multiple third parties on standby is even better. It leads to faster conflict resolution.
6. Don’t take things personally
As long as you’ve selected a worthwhile partner, you never have to worry about being personally attacked in a business partnership. Even if your partner pushes for an issue that you adamantly disagree with, remember that he’s only pushing the issue because he truly believes it’s going to be best for the business.
It will be hard at times, but try to never take these decisions and opinions personally. If you can distance yourself this way, and stay as calm and objective as possible, you’ll be a better business partner in your own right, and the business will have a better chance to prosper.
7. Know that most partnerships don’t last forever
In most situations, partnerships eventually dissolve. One person might leave out of dissatisfaction, or merely to pursue another opportunity. Because of this, you need to prepare for two eventualities. First, build out contingency plans to protect yourself and your business if your partner decides to leave. Second, be mentally prepared for your own departure in case the business no longer benefits you.
Some partnerships can last forever. Others will go bad no matter what you try and do. These strategies are perfect for the middle ground, where partnerships have the true potential to last, but need a little help along the way.
Remember that partnerships necessitate differences, so arguments and disagreements are to be expected. The key is to remain respectful and to have pre-agreed methods of mediation and settlement for your key decisions.
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