A business partnership can be just like a marriage, either the best or worst thing ever invented in life. Take care who you choose. — Wayland Coker
Choosing a partner in business can be one of the most daunting yet critical things you do as a small business owner or entrepreneur. Whether you are choosing a partner for teaming on a contract proposal effort, or choosing a partner for a completely new business offering, or even choosing a partner who will share in the risk and reward of your company, you must approach this decision with clear purpose in a patient, deliberative manner.
In my experience, good partners can be the ‘secret sauce’ to any successful business effort. Partners can also be the death knell to your business. A good partner can make you more competitive, more capable, and more attractive to clients and allies. A bad partnership — well, let’s just say it can get pretty ugly. It can be like having a poisonous snake in the garden.
So How Do I Avoid A Bad Partner Experience?
While I don’t believe there’s any way to completely remove the risk of getting a bad partner, I do believe you can GREATLY reduce the risk. Below are some of my best tips on this subject.
1. DO YOU NEED A PARTNER? First, I would start by asking yourself the obvious question; do you really need a partner? Don’t just jump into a partnership because ‘everyone is doing it.’ Have clear and compelling business reasons for partnering. You must see that you are better with a partner, or more competitive, or better priced, or something better. If you cannot EASILY answer this question ‘yes,’ then stop reading this article, pick up the phone and stop whatever partnership efforts you have underway. Yes, there are risks in going it alone, but they pale in comparison to the pain of a bad partnership.
2. IS THERE A CULTURE MATCH? Most partnerships, mergers and acquisitions that go bad do so because of a misaligned culture between the two companies. Ask yourself, is there a good chemistry between us? Can you get along? Are your cultures similar? For example, if your culture is more aligned with telecommuting and less structured working hours and the partner firm does not believe in telecommuting and enforces a strict work week, you may want to discuss that issue before you agree to a partnership. This is just a simple example and probably shouldn’t be the main reason to kill a partnership, but it makes my point about culture. What are your corporate values? Do they match the partner firm’s values? For example, if your firm strongly holds a high benchmark on honesty and integrity, it needs to align with another firm with similar values or there will be trouble!
3. ARE YOU REDUNDANT? Do your firms mostly offer the same thing to the market? If so, you are redundant. The best situation is where you both offer completely separate services and products. Too much redundancy can bring problems with work share, market differentiation, pricing and project management. To the client, a less redundant partnership makes more sense and offers them greater capability. The more redundant partnership will challenge the client to see any benefits from it at all.
4. IS THERE A CLEAR WORK SHARE MODEL? After you win the projects or business you’re partnering for, will it be clear how the work will be split? If you are not redundant, this will usually be straightforward. If you are redundant, this can get very difficult. In addition, if the partner tends to be agreeable, you can usually work out any work share differences of opinion. If they tend to be difficult, work share will bring out the worst in them. Pay attention to personality types in the partner firm. Not usually a deal-breaker, but you need to be aware.
5. DOES YOUR PARTNER’S REPUTATION ADD VALUE? You should verify whether or not your partner firm has a good reputation or not. Do they deliver? Are their past clients raving fans or mumbling malcontents? What is their track record?
6. WHO WILL LEAD? The last big area of friction can often be the question of ‘who’s in charge’ when it comes to the work or the client. You must work this out early. One common approach is to use the ‘best athlete’ approach: whomever is best positioned or qualified with the client should lead, realizing this can change depending on the client and the work. This approach requires trust, however. If your relationship with your partner is strong, you’ll have no problems. But it’s worth thinking about.
The Bottom Line
The bottom line is, if you cannot clearly and easily see the partnership making you better, in EVERY respect, then stop. Look for another partner or go it alone. Do not rush, either. Take your time. Any agreements that are signed must be reviewed by your attorney. An ounce of prevention is worth a pound of cure.
Just as a good marriage is the best thing ever invented in life, a bad marriage can be the worst thing ever invented. It’s the same with partnerships. It’s greatest strength — two firms working together on a common goal — is also it’s greatest weakness if you are not aligned well.
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