Are you struggling to build strong and lasting business partnerships? Do you find that your collaborations always fizzle out, leaving you feeling frustrated and stagnant? The truth is, building successful partnerships is not easy. It takes effort, commitment, and a willingness to learn and grow from your experiences.
Fortunately, there are some key lessons that you can master to create unstoppable business partnerships that will take your success to new heights. From effective communication to shared goals and values, these lessons can help you build relationships that are grounded in mutual respect, trust, and accountability.
In this article, we will explore five essential tips for building strong business partnerships that last. Whether you’re a seasoned entrepreneur or just starting out, these insights will help you navigate the complexities of collaboration and create relationships that will propel you to success. So if you’re ready to take your partnerships to the next level, let’s dive in and discover what it takes to build a strong and enduring business relationship.
1. Live together first
It’s wise to collaborate on a few projects before forming a legal partnership, as it allows you to gain valuable insights into pitching and executing new business.
2. Working with close friends
Working with close friends can be a risky move, as friendships are built on fun and mutual interests rather than money and business goals. While some may have success in working with friends, others may not be as fortunate. In fact, a failed business partnership can even lead to the end of a lifelong friendship.
One business owner shares their personal experience of working with a close friend who joined their consulting practice. Despite agreeing to a fixed-price contract and compensation, the friend failed to complete their work on time and demanded additional payment. The partnership ended, along with the friendship.
However, this experience taught the business owner a valuable lesson about working with friends. When partnering with another close friend on future projects, they made sure to openly discuss their strengths and weaknesses and held each other accountable to meet their expectations. As a result, they were able to successfully collaborate on two projects.
3. Different growth objectives
It is critical to decide upfront if you are building a lifestyle business that has reasonable working hours like 40 to 50 hours a week as opposed to a high-growth business where your friends and family only see you in pictures you post about the news clients you brought on and the new product/services you launched. If you are looking at high growth, you are looking at adding employees and possibly even different roles for you and your partner. Very similar to getting married and one of you thinks one child is sufficient and the other wants to form a basketball team.
4. Different financial objectives
This dove details with growth, but the partners must agree on how much revenue they aspire for because that will determine time spent on work, and the number of employees to be responsible for and will change who the company competes against.
5. One person feels they are carrying more of the work
When one partner starts feeling they are putting in more time than the other, just like in a marriage, resentment builds up. It is important that the partners write out who is responsible for what and maybe even rotate some responsibilities, so some of the less-fun activities will be evenly spread out.
6. One person feels they are bringing in more the sales
In every type of service business, you can think of partners who bring in clients who feel they should get a greater reward. The opposite is in product businesses where people who are responsible for operations feel like handling all the problems while the sales partner gets to enjoy meals, golf games, and conferences during a normal year.
7. Family balance
There are times when partners join that one is starting a family and has young kids and the other might have none or older children. The younger one might need more time off for the kids and the other might want more time to travel because the kids are out of the house. An agreement and understanding upfront will help the partners avoid a lot of anger.
8. Family members joining the business
Sometimes when the business is getting started family members get involved just to help out to save the company money and just to be supportive. As the business matures, family members might feel they have a right to join the business and possibly have an equity stake. It is important upfront to agree on whether family members should even be allowed to join the business, roles, and whether they can earn or buy equity.
9. Compensation
Most times when people enter a partnership, they just split the cash and stock evenly. The stock could be evenly split, but the cash compensation should have a formula based on who is responsible for various activities. This will allow everyone to appreciate the value of each activity.
10. Advisory board
Developing a five-person advisory board that listens to strategic plans and disagreements can be invaluable to settling differences along with encouraging open honest civil conversation.
Partnerships, like marriages, require a lot of work, honesty, the ability to listen, and the willingness to be flexible.
