A business partnership can be tough to manage, but it doesn’t have to be. When a deadline for a project approaches you need to have someone you can count on. You need someone who is compatible, someone that works to strengthen your business through their personality, work ethic, or knowledge. Not just a friend, but someone who can make your business more competitive. Don’t settle for a business partnership that doesn’t make sense or makes you feel uncomfortable. Use these four tips to put you and your business on the right track.
Finding the right person for your business partnership
Business partnerships can be instrumental when starting a business for the first time. There are a couple of useful tips you can use to find someone dedicated to your success. First, before asking your friends or family to be a business partner, consider a former co-worker at an older job. You will already know their work ethic and you know that you can work with this person. Most of the time, you have a working relationship with this person which may allow you to be more honest and forthright about the issues facing your business. Personal feelings are not intertwined. You can also network with professionals in your field at events and retreats to find someone. Try finding a business partnership that can bring large amounts of money to the table or capital.
The most obvious choice though, for most, is a friend or family member. If you are going to work with a family member or friend, try to find someone who will be exceptional in areas you lack. Try having business partnerships that bring different areas of expertise. Partnering with a family member that has coding or accounting experience can be a great addition if you are new to those areas. Select someone who has a different worldview. However, if you go this route, be open and honest in your business partnership. Dedicating yourself to work and success is going to put a strain on your life. It’s best to be paired with someone who can offer more than just what you bring to the table. Set clear and reasonable guidelines.
Establish a Business Partnership Agreement
Even if you have talked about the roles you will take in your business partnership, write them down. It’s important that you write out exact details of daily operation, percentages of profits received, dividing the business partnership, and the type of business partnership. Types include general partners, limited partners, salaried partners, equity partners, and levels within the partnership. This is important especially if the company dissolves or if you begin to hire multiple employees. You need to establish who is responsible for what department and how they will go about completing their job. It will benefit you to set up standards across the board on communication, sales, and responsibilities.
Business partnerships work effectively when clear guidelines and the chain of command is established. Also, you will set standards for distribution on profits in the business partnership agreement. Should a company dissolve, this can protect you and your partner from an unfair distribution of resources. Get this all in writing, and build your business plan around it so you will have a clear view of how your company operates. Make it crystal clear to the point that you could explain it to a customer, investor, or employee.
When your business partnership is starting out you need to clearly define goals. Your vision should be clear and attainable, especially for a small business. Outline measurable ways to define success and turn a profit. During the course of some business partnerships, people change their vision for their company which can lead to disruption and mismanagement. You should set goals early on and define how you can best reach them. Also, if your company does need to change, make sure everyone in the business partnership has agreed to this. Try using these questions when defining goals.
- What is the purpose of our product?
- How can we cut expenses?
- What new areas of business can we enter?
- What department needs help and why?
- How can we improve our weaknesses?
- What is our biggest competitive advantage?
- What is our personal brand?
- Is our business plan up to date and does it need adjusting?
- How can we automate any of our workloads?
- How can we keep customer retention high?
If you cannot communicate business objectives and goals you will fail. It’s that simple. You can have a great product, but have your business partnership fail due to miscommunication. Business plans and responsibilities must be clear and concise. You can prevent failure by being honest with your partner about mistakes and missed opportunities. Don’t be afraid to speak up and disagree. Open and consistent communication about goals, failures, and opportunities for growth will keep you on the path to success. It is critical that you implement this if you are working with a friend or family member. You don’t want to hide a glaring flaw in the business plan just to save someone’s hurt feelings.
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