There comes a time in any dedicated businessperson’s life where they are struggling to do everything themselves and may want to take on a business partner. Independent entrepreneurs and business leaders are often their own marketers, financial agents, operations managers, HR reps, and fulfill every other role in their organization under the sun.
The problem here is that scaling requires delegation of some sort. There is no way around it. And, fortunately, there are many options that the modern business person has to do so.
Some of the “scaling” options we have available to us are things like virtual assistants, programs, software, and partnerships. Often times, it is the clearing away of less-essential duties that frees up an entrepreneur’s time for focusing on those things that matter most.
Partnerships are just one of these scaling abilities. However, the reason I’d like to discuss this with you today is that partnerships are undoubtedly the riskiest, but potentially rewarding, scaling abilities you have available to you.
In business, risk and reward are often, but not always, linked in adverse relationships. What I mean is that the higher the potential risk, the higher the potential reward should be to balance things out.
This risk/reward balance can be viewed as volatility. In fact, the reason people started day-trading stocks was because modern technology was able to lessen the risk (through research, timeliness of trades, etc.) and balance out the potential reward.
Partnerships in business must be viewed in the same way. The reason that partnerships are risky is that you are, most often, releasing part ownership of your own company. The reason partnerships can be rewarding is for exactly that same reason.
Today I’d like to discuss some of the main factors to consider, and NOT to consider, when you are searching for a potential business partner. But first, let’s discuss the pros/cons of a business partner in more detail.
Pros of Finding a Business Partner
Additional capital is one of the main reasons people look to outside partnerships in the first place. Whether your business is in a bind or struggling financially, partnerships offer a solution. The right partnership can also leverage your ability to get loans and secure finances from various banking institutions.
You’ll be hard-pressed to find any business person that doesn’t state the value of the connections that they have. Having connections and relationships with various people and organizations is one of, if not the most, valuable things in business today. Just think of how many times you’ve heard someone say “It’s not what you know, it’s WHO you know.”
That being said, the right partner should have the ability to more than double your connections and referrals list. They should be able to stand on good ground with their connections and nurture business relationships to benefit everyone involved.
Similar to connections, a partner should also be able to utilize his knowledge and expertise in a way that benefits the organization. This way, you have the operational knowledge and detailed, day-to-day, experience with your organization, and the partner can bring a fresh set of eyes and experiences to add perspective.
The modern coaching industry is based on exactly that same principle. We are often so distracted by remedial and every-day things that we fail to see the bigger picture. Additional perspectives and knowledge can help us with that.
One of the largest reasons entrepreneurs bring in partners is that they feel exhausted and burnt out as they try to do everything themselves. A partnership is an option that helps busy entrepreneurs regain some of their valuable work/life balance that they’ve been without, likely since starting their company.
It’s simple, by sharing the labor, the partner lightens the load for the other. The importance of trust here is paramount.
Cons of Finding a Business Partner
In addition to sharing the profits, revenues, or work/life balance with your partner, you also forfeit your ability to deny losses on your partner’s behalf. This is the risk side of the partnership coin. You are now always partly responsible for the losses incurred by your partner’s decisions or actions.
consider this as well, your partner gains the same perspective in that they are now also partly responsible for losses based on YOUR own decisions and actions. It’s a two-way street. This is why mutual trust and respect is so important, and why communication skills and methods need to be put firmly in place when making large decisions.
Loss of Autonomous Decision
We touched on this briefly, but you must now include your partner’s perspective and decisions to influence the company as well. Often, issues that arise with autonomy are due to a lack of open-mindedness or a desperate need for control from the original owner. This perspective is understandable because the owner views the organization as his/her own.
This is likely the most difficult part of a partnership to become comfortable with, but can also be invaluable when gaining strategic insight or perspectives from a credible and experienced source that is also dedicated to organizational success. It can be stressful not to do things your way but remain open-minded. It is often said that the most expensive words in business are, “we’ve always done it that way.”
Another big factor that comes into play is whether you want to sell the company or not. Usually, all partners (or a vast majority) must be involved and willing to sell the organization if/when the time comes. This can be difficult to do considering the average number of partners is two, and if even one has differing or opposing ideas on the future of the organization, the decision comes to a standstill.
Partnerships shake up the company, that is just what they do. By implementing a different perspective, and often a different method of operations, partnerships put the stability of the organization to test. Partnerships can be highly unpredictable, and being ok and dealing with that predictability may require lots of effort.
In order to be ok with volatility, you must be sure that the benefits of partnering far outweigh the risks. That way, you will be comfortable remaining the course of operations despite the hardships or changes involved.
Although it’s a vague analogy, partnerships can be viewed as tiny marriages. There are, undoubtedly, moments in which opinions will differ and arguments come to light. This can make it difficult to overcome emotional barriers in communications or to express one’s ideas properly and without bias.
Issues may occur, visions differ, ideas aren’t taken seriously, whatever the case may be, this opens the door for emotional or personal issues with the partner to evolve into something debilitating for the organization. This is best solved in the “choosing” process.
What To Look For When Choosing a Partner
So, what should you look for when choosing a partner? Let’s discover some key factors now.
Build a Relationship
Trust is the single most important key variable when developing business relationships and overall success. Just ask Stephen Covey, author of The Speed of Trust.
Stephen Covey, the author of The Seven Habits of Highly Effective People and The Speed of Trust, says ”There is one thing that is common to every individual, relationship, team, family, organization, nation, economy, and civilization throughout the world – one thing which, if removed, will destroy the most powerful government, the most successful business, the most thriving economy, the most influential leadership, the greatest friendship, the strongest character, the deepest love.
On the other hand, if developed and leveraged, that one thing has the potential to create unparalleled success and prosperity in every dimension of life. Yet, it is the least understood, most neglected, and most underestimated possibility of our time.
That one thing is trust.” – Stephen Covey, The Speed of Trust.
Never jump into a partnership looking for a quick fix, always build a solid relationship with the person (preferably business relationship). And only when you feel that you have a solid grasp on their personality and trustworthiness can you seriously consider them for a partnership role.
Keep The Long-Term in Mind
Like I said earlier, NEVER look for a quick fix from your partner. Quick fixes invite desperation into the partner-searching process, and desperation should never be a factor in building the proper relationship with any person.
Keeping the long-term in mind is about keeping perspective on the future of the organization and finding somebody who believes the same thing. NEVER find a partner (long-term solution) for a short-term issue. Keeping the clarity of vision necessary to drive the company forward is beneficial in all circumstances and should be a major part of the decision-making process for which Partner you choose.
Keep an Eye on The Details
We’ve all heard the saying, “the Devil’s in the details” and it’s true. When you find a partner, you must clarify exactly what both of you stand to gain and what both of you are willing to risk to gain it. Too many people are overly optimistic until the time comes when they have to actually sacrifice something for their dreams, and that time ALWAYS comes at some point.
Ensuring that your partner recognizes that sacrifices have to be made before gains can be made is important and demonstrates a hard-working attitude. These small detailed assessments are necessary in ensuring that the partner doesn’t expect the world for nothing in return. Becoming clear about the nature of the partnership and the duties of the individuals is a tedious, but necessary, part of the process.
Qualify Based on Your “Why”
Don’t qualify based on wants/needs, qualify based on the organization’s PURPOSE, and whether this partner’s purpose is complementary to it. Remember, the organization was developed to do something for somebody. Put simply, the organization was developed to add value in some fashion by ridding a market of “pain points.”
Imagine if you found a partner whose purpose was entirely symmetrical and aligned with that of your organization. You would likely trust them to make decisions, give them more advanced work to do, and respect more of their opinion.
After all, the best leaders make decisions based on the future and vision of the organization, which is why it is necessary for a partner to share that vision and ensure the long-term health of your company.
What NOT To Do When Searching For A Partner
So what should you NOT do when looking for a partner? Let’s discover some key considerations now.
Never Choose The First Partner
Despite whether or not this partner seems to have all the bells and whistles (figuratively) that you’re looking for, wait until you have options. It is entirely possible that, just because you have a potential partner lined up, you give way to impulsivity. Impulsivity is similar in result to desperation, and can never be good for business.
Waiting until you have options benefits you in a few ways. Firstly, it allows you to compare the options to determine which is, ultimately, the better fit for you and your organization. Secondly, having options allows you to create a fundamental image of your ideal partner, much like piecing together a build-a-bear, or adding specifications and comforts to a car.
Perhaps that sounds a little inhumane, but it’s true! Being able to witness, first-hand, the personalities, accomplishments, and experiences of various individuals give you a method of gathering preferences. Therefore, through these preferences, you can narrow down your search to the most ideal partner.
Never Partner With A Non-Business Friend
Although this is a controversial point, I feel strongly that partnering with a non-business friend is a big Taboo in business, and not beneficial for you, your organization, or your friendship for that matter.
The reason people often do this in various respects (partnering, hiring, etc.) is because they feel comfortable and familiar with a friend more so than they do with a stranger or potential business partner. This familiarity will seem to be an initial strength, but can quickly go sour over the long term.
Anytime an argument arises with these friends, it inevitably becomes personal and, therefore, shuts down effective communication that could benefit the organization itself. You will find yourself defending your own actions when arguments or issues arise as opposed to benefitting from a business-centric relationship.
It is also possible that friends take advantage of their familiarity with you and skip out on potentially important duties, decisions, or other things and fail to “pull their weight.” In which case, confronting the issue also becomes personal. This has been seen time and time again.
Partner based on business relationships and qualifications, not personal relationships and familiarity.
Don’t Be Afraid To Be Assertive
Never be afraid to be assertive, there is a difference between being assertive and being rude. You shouldn’t feel guilty to stand up for your own needs or wants, let alone the needs and wants of your organization. If you feel yourself being pressured into a partnership by a person, this is a HUGE red flag. It is possible that this person will continue to pressure you into decisions further down the line.
Being assertive simply means standing up for what you do and do not want. In the case of choosing a business partner, don’t feel obligated to choose somebody based on any non-relevant factors like their personal expectations, hope, or guilt. (close ties here with hiring friends/family)
All in all, make sure the deal seems fair and the workload is evenly distributed. Never take an unfair deal, as this destroys trust and relationships from both sides of the fence. Remember what Stephen Covey says, “Think Win-Win.”
NEVER Expect Them To Change
Expecting a person to change after you’ve made the deal with them is just silly. Oftentimes, people enter personal relationships because they believe they can change and help their spouse/partner become who they want them to be. What happens to these relationships? They go down in flames.
That’s a dramatic explanation, sure, but the principle is entirely the same. Choosing a partner based on a single quality and justifying it with “They can learn the rest later” is debilitating to you and the organization. What if they CAN’T learn the rest later? You’ve now just given away the leadership rights of your organization to somebody who cannot (or will not) change.
This is why it is paramount in business (and personal relationships) to accept and be comfortable with trusting a person BEFORE you enter a relationship with them. You must ask yourself this one vital question, “If they DID NOT change at all, would I still be comfortable taking them as my business partner?” If yes, then that is a good decision for yourself to make.
You should have no issue with their attitude/cultural expectations from the beginning.
All in all, I will put the main points again here.
Benefits of Partnership:
– Work/Life Balance
Cons of Partnership:
– Loss of Autonomy
– Emotional Conflicts
What TO Look For (or do):
– Build a Relationship
– Keep the Long-Term in Mind
– Keep Your Eye on the Details
– Qualify Based on “Why”/Purpose
What NOT to Look For (or do):
– Don’t Choose the First Partner
– Don’t Choose a Personal Friend/Family
– Don’t Be Afraid to be Assertive
– Never Expect Them to Change
Thanks for reading!
Work With Austin
-Austin Denison is a change management consultant from Southern California and founder/CEO of Denison Success Systems LLC. He is the author of The Essential Change Management Guidebook: Master The Art of Organizational Change as well as The Potential Dichotomy: The Philosophy of a Fulfilling Life.