In today’s business landscape, finding the right kind of partnership can open the door to new markets and business opportunities. Moreover, it can also bring you and your business unique and valuable skills and resources, while the wrong partnership could be costly and frustrating.
Whether it’s co-founders, investors, collaborators or larger corporate entities, in this piece, we explore some tips on managing key business relationships.
1. Choose wisely.
The most crucial step is determining which skills and experience you require to best align with your skillset. Of course, we recommend using your own judgement, but never hesitate to ask for advice from seasoned investors. Beware of including friends or family members as they are not ideal partners.
2. Your partners need to know about your business’s success as much as you do.
We recommend finding a partner who shares the same passion for your business as you do. Search for people who share a similar level of commitment and drive. Opt for someone who is involved with their passion outside of business hours. Perhaps you’re on the hunt for an expert financial analyst, consider attending local meetups within the financial community. This matters, because if they’re willing to spend their free time to participate in work-related meetings, they’re more than likely passionate about what they do, and this will ultimately reflect in their work.
3. They should have a shared vision.
Ensure that whomever you partner with is on the same wavelength as you are. If they are inspiring you, uplifting your efforts, supporting you, or showing better ways of doing things, we advise removing them from the equation. Take the time to really look at you surround yourself with, if they are disciplined, like-minded and pushing for your best; you’re in good hands.
4. They share a common “why”.
Entrepreneurs on the hunt for a partner should ensure that whomever they select shares a common “why” to their business. If you know why you’ve started a business and it is shared among your partners, you will effectively always be working with the same foundation and a bolstered level of commitment to your vision and goals.
5. Partnerships have their perks.
Find someone that will have your back all the time. It will make it easier for you to grow and experiment with new things, knowing you have the devotion of your partner, whether you succeed or fail in your goals.
6. The best partnerships still require work.
Managing people becomes a vital aspect of any business in the long-run because all business is about people. People tend to do business with people that they like and trust; thus, integrity is king.
It all boils down to sticking to your guns and being true to your word. It’s of vital importance that people trust you and that you trust them. Both parties need to live up to anything which is promised, in the end, being someone true to their word is all it comes down too in business.
7. Find agreement on managing disagreements.
In the scenario where you and a partner do not agree on something, it’s crucial to decide on how the matter will be dealt with beforehand. Does one person in the partnership have the final say, does it come down to a vote (if there are more than two partners)? It’s wise to avoid any situations where your business hits a roadblock due to partners not agreeing on something.
8. Partnerships are not always 50/50.
A common mistake made by many business partners is agreeing on a 50/50 split. The harsh reality is, it usually doesn’t work that ways and things tend to fall apart. Instead, we recommend starting with a 10/10 split with the remaining 80 staying within the business. Then quarterly, factor in your performance metrics such as sales, hours worked, goals and so forth, and split up an additional 10% of the business. Within two years, all the equity will be distributed in a fair division. No one is capable of faking performance for two years, and if they’re able to, they’re probably ready to do it forever.
9. VCs are partners too.
Consider the analogy of dating. Go on as many dates as you can with potential investors as necessary for you to find a comfortable fit with an investor team. Whomever you select needs to be patient and supportive and commit to providing your business with access to their network. Moreover, they should understand your market and business model.
10. Treat your VCs as partners.
Ensure that you have regular lunch or dinner meetings with your investors, perhaps every three months for inactive investors and monthly for active investors. Ensure proper communication about what’s happening within your business. Never expect your investors to make your business a success; it’s up to you to make the magic happen.
11. Partnerships with large corporates require patience.
Generally, the bigger a partner, the longer everything will take. Due to the size of certain entities, partnering with them can take a considerably long time to master. However, once your ship is sailing in the right direction, it will never sink. So put in the time and effort for these partners as in the long-run they’ll aid in helping your business thrive.