By Lucy Kiruthu – Lead Consultant and Trainer – Evolve Business Consultants
Business partnerships are a noble idea because after all, two are better than one. It was from this viewpoint that I jumped in with both feet to explore the possibility of a business partnership. That was seven years ago just a few months after having stepped into consultancy and registering Evolve Business Consultants as a sole proprietorship. Even though I had my first client Synthesys Systems, I naively considered this new move because it presented greater possibilities. Except for the first year in which I was stepping in during maternity leave, I did not give much thought to the future of the business relationship and everything that needed to be agreed upon in writing upfront. The only thing I recall is that I was quite aware that business partnerships are more difficult than a marriage and require extra effort from all parties to work. Two and a half years later, I stepped back into Evolve Business Consultants to give it another start. I consider this to have been a step in the right direction. In this first issue of #EvolveInsights Quarterly, I share with you some Insights that I believe would help partners live happily ever after.
The Question of the Partners: One may think that getting a business partner is like getting a new boss or a new colleague or a spouse. This is not the case; partnerships are complex because of the level of trust and understanding that is required when two partners or directors of a company come together. I believe that a sincere desire to make the business flourish is a prerequisite for a partnership that hopes to be successful. It is also very important to vet the partner and to know their values, their strengths as well as their weaknesses. Most importantly, the partners must commit to the relationship, value each other and communicate effectively just like in marriage. The partners must be ready to come to an amicable agreement to work together not only in the short term but also in the long-term. I believe this is best done between the key partners without the meddling of partial third parties such as spouses or parents. With third party partiality, trust is lost in the partnership, it is difficult to bring it back, and suspicion and contempt starts to take root. Once in the partnership, the partners should do what they said they would do and continue to build a strong business relationship based on trust. It also helps to have a neutral mediator in case of discontentment. In addition, there is need to be clear on how a graceful exit would look like.
The Question of Effort and Roles: The business partners’ relationship needs to be nurtured and the business too requires even much more effort to succeed. Each business partner desire should be to build something bigger and better together by combining their efforts. This requires not only a commitment to make the relationship work but also a yearning to make the business great.It is important to discuss upfront how much time and effort each partner will put in as well have a clear definition of each partner’s roles and responsibilities. These details need to be agreed upon upfront and key items put in writing. Based on each partner’s strengths and weaknesses it is best to pick the stronger visionary partnerto lead the business to greater heights with support of other partners. Allother roles need to be allocated based on strengths and resulting synergy as opposed to self-interest. The decision-making responsibility especially regarding major decisions such as capital expenditures, hiring family members, managing poor performance etc. need to be well stipulated. I believe the question of effort can be successfully addressed if the partnership’s vision and end gameare well defined from the onset.
The Question of Money: Successful businesses make a profit. In a sole proprietorship, the question of how this profit will be shared or how much the owner will pay himself does not arise. In a partnership, the question of money is a thorny one and requires a hard upfront talk between the partners. It is important not only to agree on the salary and the benefits but also on what can be expensed and the nitty-gritty of bank withdrawals. Shareholding, profit sharing and bonuses are also fundamental issues that need to be tackled upfront. The question of money above everything else needs to be put in writing because it can be a major source of conflict.
Many business partnerships big and small have failed. Others have succeeded impressively and lived for decades beyond the founding partners. I am not an expert in building successful partnerships but based on a personal experience I would advise those considering getting into a small business partnership to meditate upon these insights. Above all, one should not get into a partnership if not ready, the partners should have clarity of the business they are trying to build and most importantly, everything agreed upon needs to beput in writing upfront. I still strongly believe that two are better than one. Better still if each partner is able to run their own business before coming together it would make the partnership more treasured. With these insights, it is my hope that we will make better business partners into the future.
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