This I can say is a tested and proven concept, especially in the field of partnership and teamwork. It is the concept of synergy in business management. Research has it also that a genius marketer can only give their best value to about twenty to two hundred customers at a go. Anything beyond that will cause diminishing returns to the business. This means that as the business grows (especially in customer base), more marketers are needed.
This same is true for growing your business at the board level, as the structure evolves, you need more people to work with you to fortify the business and ensure continuity and further expansion.
A partner is expected to see what you cannot see, know what you don’t know or know what you know better than you, go where you would ordinarily not be able to and so much more.
Before the proposal.
Below are initial steps you need to take before proposing a partnership.
Be clear on your value proposition.
It’s important you answer the following questions.
- What is your business eureka story?
- What problem are you solving?
- Why does your business exist?
- Where do you see your business in the short to medium term?
- What stands you out from every other person in your line of business? (this includes those in similar or related businesses)
What are your key performance indices?
Have a list of key metrics you want to achieve as a business like
- Expansion (be specific or close)
- Cost efficiency
- Investor attraction
From just these 2 elements you will easily and clearly identify
- What your business and you require from a partner
- What you have to offer such a partner
- What your expectations are of such a partner
Do background checks.
In those days in my small village in Etsako, in Edo state, Nigeria, when you present a partner for potential marriage, the entire village will go all out to investigate the person, even if it means travelling to the person’s village wherever it is and observing their general lifestyles. They do same for your potential spouse in their personal abode too if they do not live in their own village. They usually do this discretely.
When they are done, they present all their findings to the gods and now seek final say if the marriage should hold or not. Armed with physical and spiritual backing, the elders of your family will now get back to you if you have their support to go ahead with the marriage or not.
This does not guarantee the success of the marriage, but it minimizes the various issues that would have come up without you knowing it, or issues that you would not have taken cognizance of to ensure the marriage and not just the wedding and you succeed.
I am not asking you to follow this verbatim, but this forms a template for deciding on your potential partner. Its basically like dating, so as a non-exhaustive guide, do the following.
- Source for and qualify your potential partners. Try get at least 5 potential partners.
- Score them based on your findings, from top scores to least scores. As a guide, you should score them along the lines of
- Your target market and the market needs
- Culture and core values compatibility
- Score their brand reputation and credibility (personal where applicable and business)
- Score their perceived or actual influence in their industry and in your industry.
- As much as possible, be clear on their primary reason for partnering with a business like yours
- Score their financial status in line with your business finances. Please do not misconstrue this. Engaging partners and engaging investors have a thin line dividing them. A partner can be an investor but not every investor is interested in partnering with you. A partner in this study is one that will run the business with you, probably be part of operations. Such a partner might be coming on board due to their technical know-how, their influence/affluence, and their money. It can be a combination or 1, 2, or all these reasons.
Note that when sourcing for a business partner, it could be an individual, group or organisation. Don’t just focus your mind on an individual alone (like many of us do).
Your partner, like a marriage spouse can make or mar the business, so do not rush into it, make it more like a dating relationship to courtship before proposal and then marriage.
Number of partners
Have a number in mind when sourcing for business partners. On the average, a small business needs not more than 2 or 3 people. Keep the number of partners plus you as an odd number for voting reasons to prevent a stalemate.
Be realistic and reasonable with what you want to offer from your business to the potential partner, which includes your business equity. Quantify and evaluate the business value. Quantify and evaluate what they are bringing into the business (this does not have to be cash alone, it includes man work hours, business network, skills, experience, and so much more). If cash is part of what they are bringing, it’s also good.
Be ready to draw up legally binding agreements that protects all parties and the business. Have all parties sign their agreements before venturing out.
Qualities to Look for When Choosing a Business Partner
A large portion of small businesses die in their first decade of existence. This is caused by many issues like, finance, structure, government policy, and even partners. A lot of investors are more comfortable with a business run by more than 1 person usually as co-founder or executive directors. It eliminates the key man risk factor and strengthens the business in terms of issues like continuity and corporate governance.
90% of startups die with the first 3 years of take off and about 50% of the rest do not survive the next 5 years. Having the right partners minimizes this sad statistic.
Below are key items amongst many to look for in choosing a business partner.
They complement you.
You need to know yourself – your strengths, weaknesses, capabilities, and skills, know your personalities and what makes you tick. This helps you to know and be on the lookout for a partner that complements you. This is something that a lot of people know they should look for, but they don’t. However, it is probably the most important of all things to look for in a business partner.
Often, many people pick partners who are replicas of themselves. Other times, they pick people who are so different compared to them that they are in constant conflict. Find someone who complements and not contrasts your skills.
If you are not good at a particular aspect of doing business, find a partner who is. Someone with a different skill set can add more value to your business that may ignite something new and brings much more success than either of you would have achieved alone.
For instance, if you are starting an APP software company and you happen to be a great APP programmer, you may not be as good at marketing and other aspects needed to maximize your business’s potential. But, by partnering with someone who is good at advertising, marketing, and sales, you will be much more poised to promote your services and capture a successful share of the APP market.
You share common goals and values.
Make sure that the person whom you are considering as a business partner has business goals that are aligned with yours. In other words, you should both want to create the same thing.
This is not just about both of you interested in making money––it means having the same or similar ideas of what the company should look like down the road (in the short to medium term, and even in the long term). It is better to find out upfront that you have differing business goals than when you have signed an agreement and have all your equity on the line.
Furthermore, you may want the same thing, but have different ideas about how to go about it. If the person values fast profits over quality while you value quality and customer service over profits, you may eventually have a tug-of-war over which route to take to achieve your shared business goals.
You are comfortable talking with the partner, even on tough issues.
You need to be able to discuss every aspect of the business with this person. Otherwise, issues between the two of you can begin to deteriorate with time, and those that could have been worked out easily will become even more difficult to resolve. discord will then set in and a whole downward spiral will ensue just because you wanted to avoid discussing an issue with your business partner.
This doesn’t mean that you need to find someone who agrees with everything you say, but you need to be relatively sure that you will be able to:
- Always discuss any differences you have with the person,
- agree on a resolution or meet at some point, and
- come out of it with a forward resolution and agreement.
There must be elements of trust.
Trust is not instant but has to be built over time. But elements of it must exist for a relationship or partnership to exist. A good business partner must be someone whom you can trust. Everyone has their own ways of dealing with life issues; ways to deal with stress, success, and failure, but if you can inherently trust your business partner, you will have a better chance of succeeding as partners.
Also, when you know that your partner can and will fulfill their roles in the partnership, you will be able to focus better on your own. If you don’t have faith in your partner’s ability to do what they need to do, you will be distracted and will not be as productive as you can be.
Would you hire a carpenter to run a bank? It is extremely important that your business partner understands the dynamic of the industry that your business is involved in. am not asking that they be professional bankers but have a working or general knowledge to a good extent of banking business and their models.
What are they bringing to the table?
The value of choosing a partner that understands your industry is that the partner will not spend much valuable time learning the business and may already have contacts and ideas that can help your business.
I am not saying that they have deep understanding from the get-go as they can learn while working with you, but they need to know enough that their area of expertise can have a positive effect on your business.
Business experience/work experience
- Does this person have the experience to help your business grow?
- Have they been through the ups and downs of running a business and know what it takes to be successful?
- How will they respond to employees who have lost faith in themselves, vendors who are screaming for payment, and clients who are reconsidering the business they give to your company?
Knowing how to deal with diverse circumstances can be the difference between business success and failure, and when a business owner has no experience dealing with the many challenges that a business can face, they are at a huge disadvantage.
You do not need to get a partner who is an expert in all the areas you are not as that is usually an almost impossible feat. What you need is a partner that can deal with or be involved in your metrics like consolidating debt and reorganizing bank loans.
Similarly, if you intend to pursue government contracts or focus on a particular niche market, you will probably want a partner who has experience doing business in these areas.
Ability to source new business.
Business partners should bring with them valuable contacts that can lead to sales or new business. For instance, if you have just come up with a new and innovative business solution, your new partner should have contacts of company heads who will jump at the idea. Your new partner can then use their previous relationships with these company leaders to secure new business for you.
Whether you operate as a partnership or limited company, you need a business partner who is financially stable. Money is the leading reason why most businesses fail. It is also one of the most common points of conflict between business owners.
A person in a quagmire of financial challenges (personal and in business) will not be able to support your business effectively.
Ability to put their money into the business if required.
Not every potential partner will have the personal resources to invest as much into the company as you have, but they should be willing to invest as much as they can afford. When financiers and other investors see that your partner is also substantially invested in your company, it gives them comfort and makes them more willing to invest their money. However, when you need money and have a business partner who can afford to invest more money but won’t, it sends a negative message to other potential investors.
A person with vision is someone who can recognize the value of innovation, new ideas or business trends and be involved in actively carrying them forward. They can prioritize ideas and strategize for success. This person will have the ability to listen to an idea pitch and instantly chart the next steps that need to be taken to make it happen.
A solution provider
A solution provider is someone who can save your business time and money by pointing out problems and improving on new business processes before they are implemented.
Having the ability to challenge the ideas that are under discussion is important, so a good solution provider will be able to play devil’s advocate to test the soundness of an idea. This person will also be able to protect your business by paying attention to details that can keep your business organized and running smoothly, and they will be able to achieve business goals through the most basic and efficient means.
According to Legalnature, “We are all too often tempted to go into business with our friends because we love them and enjoy spending time with them. But your friend may not be the right person to be in business with. They may not have the knowledge or experience to help you achieve your business goals, and if they don’t, you will find yourself picking up the slack whenever they are in over their heads.
To find potential business partners, talk to your accountant, lawyer, or banker; these are people who have a wide network and generally want to see your business succeed, so they are going to recommend good people. You can also talk to people in trade associations, chambers of commerce, and business incubators to find like-minded people who might make good potential business partners.”
In conclusion, Legalnature says “In many ways, having a business partner is a marriage of sorts. You will be spending a lot of time with this person, so you need many of the same things that you would need in a good marriage, such as:
- complementary qualities,
- open and effective communication,
- shared values and goals,
- trust, and
- financial stability.
You need to dig very deep to know who this person really is before you decide to enter into a relationship with them. Sometimes, this means asking some very difficult questions, but if you ask the important questions before you enter into business with this person and be sure you have a partnership agreement in place, you can prevent a lot of the headaches that can plague your partnership and jeopardize the future of your business later on.”