The process of initiating a business venture is fraught with challenges. From securing a location to staffing a commercial enterprises, small business entrepreneurs tackle diverse tasks, leading up to a business launch. And that’s only the beginning. After your doors are open for business, the stakes are even higher, with overhead and other financial commitments tugging at your working capital. As intimidating as the prospect is, going it alone, launching a joint venture with a business partner adds another set of considerations.
Partnerships have advantages, when compared to sole proprietorships and other business structures, but it’s important to enter joint arrangements with clear understanding about what the process entails. Fruitful partnerships have a long track record in business, representing some of the most successful commercial ventures ever launched. But there are also many failed partnerships on the books, doomed by poor communications, misaligned values, and unrealistic expectations.
If a prospective partnership is on your doorstep, you only have one chance to jump off on the right foot. Due diligence and thorough vetting are essential to protect your interests, including an honest look at your own strengths and weaknesses, relative to self-employment.
It isn’t for everyone, but under the right conditions, joining forces with a trusted associate can push your professional potential to the next level. Young Entrepreneur Council recently shared ideas with Inc., outlining a number of considerations that should be on your radar when partnering for commercial success.
Align Your Values and Interests
A business partnership is a marriage, of sorts, so the better synched you are with your partner’s views and values, the less likely your venture will end in divorce. In practice, it’s often professional like-mindedness or mutual interests that bring together business partners, so most entrepreneur pairings have common ground on which to build a business. It’s what you do with your shared enthusiasm that ultimately spells success or sparks struggles.
The founder of marketer LSEO.com learned lessons about partnership the hard way, when he tried to partner his digital marketing agency with a technology company. According to Kristopher Brian Jones, the partnership did not work, because their interests were not aligned. Jones wanted to grow the agency and find greater independence, but the partnering business had a different strategic vision for the company. The solution for Jones was to end the partnership, in order to scale his company the way he had in mind.
Open communication between prospective business partners is a good start, aligning your views, but you may also have to roll up your sleeves together, hashing out potential scenarios you could face as partners. If you have divergent views that can’t be bridged, it is better to find out before you invest time and money on a business launch, than it is to spin your wheels with a short-lived venture.
Acknowledge Actions and Accomplishments
Many would-be entrepreneurs float grand ideas about business success, but not every potential partner is willing to walk the walk. Rather than relying on collaborators’ words, focus instead on their actions. Does a candidate for partnership have prior experience running a business? Does his or her work record reflect long hours and commitment to a cause? Has your prospective partner shown flexibility in the past, deftly responding to unforeseen conditions, with timely, effective solutions?
Answers to these and other pertinent questions foreshadow what your working partnership will be like. In the end, a business partnership is always a leap of faith, but it’s best to leave your feet planted firmly on the ground, until you’re comfortable with a would-be partner’s work ethic and dedication to your shared professional ambitions.
Refine Job Roles and Expectations
Whenever you partner, it’s essential to clearly articulate each stakeholder’s role in the arrangement. Without clear-cut duties and responsibilities assigned to specific partners, it’s too easy for important details to fall through the cracks. And when things do go wrong (and they will) loose job descriptions result in finger-pointing, rather than unified problem solving. Your goal before launching a partnership should be individual accountability for every aspect of your commercial venture.
Kristen Kimberly Marquet, founder and creative director of Fem Founder, once considered aligning her business with a West Coast partner. While vetting the proposed partnership, Marquet found her team would be responsible for driving most of the revenue for the venture. Weighing the heavy expectation against the benefits of the partnership, Marquet chose not to make the move.
Preserve Partnership Details in Writing
Handshake agreements are risky, because as time passes, the involved parties may form different recollections about prior agreements. Even if you’re striking-out in business with a family member or a trusted person you’ve known for years, partnership agreements should note every detail of the arrangement, including contingencies for various scenarios.
How are profits to be split? What happens if a partner dies? How much personal capital did each partner invest? Anticipating scenarios and accounting for various professional outcomes can help you and your partner avoid problems later, should questions or inconsistencies arise.
Answer a Tennis Question
Effective partnerships prevail when each partner’s skill set compliments the other’s. If you’re considering a business partnership, Infinite Windows co-founder, Esteban Kadamani, suggests a tennis metaphor, which may help you evaluate potential partnerships. “Would I pick the person as my doubles partner in tennis?” asks Kadamani, before aligning with a business partner. He believes the answer provides clues about partners’ ability to work well together, achieve balance, and effectively communicate about diverse business issues.
Launching with a partner adds a number of unique considerations to the already lengthy list of startup concerns. Before making partnership commitments, it’s important to vet potential collaborators, define work roles and professional expectations, and create a written record of your partnership agreement.