Building Effective Partnerships in Business

Business partnerships. They always start off with the best of intentions. You’ve likely heard the horror stories about partnerships gone bad - marriages ruined, friendships ended and businesses closed. For every story you see or hear about in the news, there are scores of others that never make the public press. Regardless of the stories, partnerships in business present a daunting, yet significant opportunity. An effective partnership can help a business reach a much greater level of success, in less time, than if the same individuals pursued the business using their own efforts.

Over the years, I’ve had several in-depth conversations with current and former partnerships and have developed a list of common factors that differentiate successful partnerships from those that have failed.

Values
Values are probably the most critical factor affecting the relationships of partners. Each of us has our own set of values, whether we’re consciously aware of them or not. What are your top ten values? If you had to narrow your list down to three, or even select your single most important value, what would you choose? Disagreements between partners usually occur due to conflicting values (or differing prioritization of values). As a partnership, determine your values up front; then prioritize those values in order of importance. Complete honesty and openness is essential for this process. When tough decisions need to be made and the inevitable problems occur in business, clearly defined and prioritized values, determined in advance, will help you weather the storm and ensure that you’re making the right decisions for the business.

Common Goal/Vision
Successful partnerships must have alignment in their goals and vision for the business. So often, partnerships are formed on a whim, and the partners jump right into running the business without first deciding what vision they are ultimately striving to achieve. Additionally, both short term and long term goals need to be discussed and agreed upon. Goals are the milestones toward achieving the vision for your business. The combined efforts of your partnership must be unified, working toward achieving these common goals. Lack of common goals will ultimately create friction and frustration and poison the environment in your business. Remember, your business is a mirror reflection of you and any lack of unity in your partnership will be clearly evident - to your employees, customers and suppliers.

Clearly Defined Roles & Expectations
What are the expectations of each partner in terms of the individual roles they’ll play in the business? While one partner may expect that work is done on nights and weekends, another may have strong feelings that work should shut down at 5pm each day. Partnerships begin to enter dangerous waters when one partner feels like the other(s) are not pulling their weight. To avoid this scenario, clear roles must be determined and then documented. Expectations (or Rules of the Game) need to be shared with each other and agreement reached among the partners. Each partner should also have a clear job description, documenting expected results and objective measurements for accountability. Be sure that your partnership leverages the strengths of each partner in a way that achieves the greatest results for your business. Some great tools to assist you in this effort are personality and behavioral assessments. These assessment tools can provide great insight into each partner’s abilities and assist your partnership in getting the right individual into the “right seat on the bus.”

Operating Agreement/Corporate By-Laws
A thorough operating agreement and/or corporate by-laws are another absolute key to successful partnerships. Work with a reputable business attorney to develop these legal documents that provide governance of your specific business entity. Education and awareness are vital in this process. Don’t shortcut or minimize the importance of this step in forming your partnership. Your operating agreement and/or corporate by-laws should also include a clear exit strategy. Partners should determine a specific time limit for how long they’ll work together. The partnership agreement can always be renewed if the partnership chooses to continue operations.