In this episode, we are joined by Startup Junkie consultant Jayshica Amargos. She joins us in a fun conversation about business partnerships.
How to Put Together a Successful Partnership
Find the right partner/s.
- Do DUE DILIGENCE.. Be diligent enough and check references of potential partners even if you already know them. Examples of questions to address in finding partners are as follows:
- What companies are in your portfolio?
- What types of companies and individuals do they like to work with?
- Will they open doors?
- Are they going to be tough to work with?
- Are they just only financially oriented or are they’re going to add value in other ways?
- Being clear on your purpose in entering into a partnership will also help you find the right partner/s. For instance, if you only enter into a partnership because you cannot afford to pay for your own employees then you might end up with a wrong partner because in doing so, you might neglect to take proper due diligence on that person having only in mind your desire to establish a company with employees.
Identify red flags.
- Identifying red flags would save you from a failed partnership. For example, if a prospective partner would not allow you or your CPA to check the books then that could mean that something is being concealed from you, a sign to walk away.
Be definite on how you would go about the partnership.
- Clearly define the following with your partners:
- Responsibilities and scope of work
- Expectations and Scope
- Dispute/Issue Resolution
Figure out if there is a cultural fit between you and the other party.
- Identify your own company values, objectives and culture.
- Once you have identified yours, have a comprehensive understanding of what the other party has - its values, objectives and culture. Examples of questions that you might want to consider are as follows:
- What is their purpose?
- What drives them?
- Why are they doing what they are doing?
- What is their vision?
- Where do they want to be in 5 years?
- What’s their mantra, their mission,?
- What they do on a regular basis?
- What are their core values that drive how they operate?
- One of the main reasons why many partnerships fail is because parties fail to align their cultures and so the best thing to do is to identify this at the earliest stage.
- You might also want to enter into a team agreement or a trial period with a partner in order for you to assess if you and your prospective partners are culturally aligned . This will also allow you to decide whether to push through with the merger or partnership.
- In every relationship, communication is a must. In a partnership, expectations should be defined and this could be done by regularly communicating with each other.
- Address issues early on, do not allow it to get complicated before resolving the issues.
Divide the labor.
- Once goals are set and expectations are identified, take time to study each other’s strengths when it comes to the functions of the business - sales and marketing, operations, accounting, compliance, etc. to identify the responsibilities of each party for proper delegation of work. If there are overlapping skills or expertise as to those functions of the business, partners must decide who is responsible for what task (marketing, sales, operations, etc.) instead of both of you handling the same function.
- There must be complementary strengths among partners and this could be done by proper delegation of functions.
- If everybody can do the same stuff then it is not a good partnership.
Set aside egos. Master emotional intelligence. Be self-aware.
- When companies are merged or a partnership is established, it is expected that different leaders with different values and personalities would have different ideas or perspectives to bring into the newly established company and this could cause misunderstandings and issues. In order to avoid emotions from taking over, especially in tough situations, these leaders must have the commitment to listen to each other to resolve the situation. They should be able to stay calm and respond logically.
- If there are people who are emotionally responsive rather than logically responsive, think of a strategy on how to deal with it. Have a coping skill for tense situations and understand how to diffuse a tense or bad situation.
Honor your commitments as a partner.
- All parties in a partnership must be aware of what they are getting into and should take part in all the affairs of the partnership. Commitment is very important in any relationship including business relations. Once you are a partner, make sure to honor your commitment and bind yourself to what has been agreed upon. If you cannot, have the class to exit gracefully before things get real bad and irreversible damage is done.
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