A proper partnership agreement makes your new venture real. But the success of your business partnership depends on several intangible key factors that you must consider from the outset.
Sure, your partnership may look great on paper. But how well do you and your partners actually work together? Do your values align? Can you trust each other?
The last thing you want is to regret going into business with someone after the fact, having spent years of your time and thousands or millions of dollars on a partnership that was doomed to fail. Before you sign on the dotted line and start leveraging your position on behalf of the partnership, make sure you can answer all of the following questions.
1. Teamwork – How Well Do You Work Together?
If you want your partnership to succeed, you’ve got to work together effectively. Ask yourself: do you feel like you and your partner are usually on the same page, or do you often feel let down or left behind in the dust? Does everyone know what duties and responsibilities they have? You and your partner should be able to split decision-making power so that you’re not engaging in destructive power struggles that sap morale and ultimately hurt the partnership.
A good team works together like a well-oiled machine. That doesn’t mean you don’t have your difficulties, but you should be able to work through challenges constructively together so that you can keep moving forward with your vision. The right team dynamic allows you and your partners to anticipate, delegate, and cover each other’s needs as they arise.
If your partnership is new, your team dynamic may take time to develop. Ideally, it will get stronger over time – especially if you set yourself up for success in the beginning. That means staffing team members with the relevant expertise to handle all the different needs of your business – such as sales, marketing, legal, data resources, and call center operations.
2. Communication – Are Everyone’s Needs Being Met?
Communication is a huge part of teamwork and a major factor in building success. 86% of executives and employees report ineffective communication and lack of collaboration as the source of workplace failures. How do you and your partners communicate with each other? Do you listen to each other or talk over one another? Are your communication styles compatible or do you keep butting heads without making any headway?
Pay special attention to how your partners communicate with you while you are forming your partnership. Are they slow in their responses to emails, texts, and calls? Do you have to ping them multiple times to get an answer? Whatever patterns you see now are what you can expect for the future. If they keep missing deadlines, that could be a big red flag.
3. Skill Sets – How Do You Complement Each Other?
A partnership is all about combining your skillset with someone else’s for better results than each of you would get on your own. The best partnerships complement each other – you want to find a business partner that strengthens your weaknesses and vice versa.
The whole point of entering into a partnership is to get greater resources to accomplish your vision. Ideally, you want to find a partner who can provide the resources and skills you don’t have on your own. Maybe you have the science, technology, and capital – while your partner provides the technical know-how and industry connections. The most successful partnerships will allow you and your partners to do what you are all best at for the good of the whole.
4. Vision – Are Your Long-Term Goals Aligned?
Long-term goals are just as important as your short-term plans and they shape your whole strategy from the outset. Is your ultimate goal to grow your business and then find a buyer? Or are you more of the mind to grow your business with additional partners in the future?
If you and your partners don’t see eye-to-eye on long-term goals, it might be time to sit down and have a conversation about it. Otherwise, these fundamental issues can cause major disruptions to your relationship later, after you’ve already invested so much in the partnership.
5. Trust – Can You Trust Your Partner to Execute Your Vision?
Trust is critical in a business partnership, just like a personal relationship. You must be able to trust that your partners are as invested as you in making your vision come true. Not only that, but you must also be able to trust that your partners will deliver on their promises – whether that involves inventory, capital, expertise, or another type of performance.
You won’t be able to supervise your business partners all the time – and neither should you.
You might trust your partners because you know them personally. But if you don’t know your partners that well, that’s where proper background research comes in. Does your partner have a record of success that they can prove? Have they won and delivered on big contracts before? What are their ratings and reviews like online? Does their business have any complaints, lawsuits, or bankruptcies? No one is perfect but it’s good to know what you’re getting into.
6. Temperament – Is the Partnership a Cultural Match?
Temperament and cultural fit are important whether you’re going into a business partnership with an individual or another business. Is your partner aggressive in business? Are they also aggressive when it comes to litigation? Are they new in their industry or an established player?
Cultural fit can really come into play when a larger company enters into a partnership with a smaller company. For example, you may be a startup doing things differently in your field when it comes to office structure, remote work, employee benefits, and expectations. You may be dedicated to “green” and sustainable operations. Does your new partner match or at least respect your values enough not to compromise your mission statement? If you already have customers, will the partnership with a larger company alienate any of them?
These are all important considerations you must take into account while you’re in the process of setting up your partnership. The next step of course is to create your partnership agreement.
If you want to cover all your bases, your best bet is to hire a business lawyer who can help you get the most out of your new partnership venture. Call the Philadelphia offices of Holmes Business Law at 215-482-0285 now to get started.