You just had lunch with a colleague and you felt like the two of you were completely in sync. You got excited talking about vision and ideas. Now you’re thinking about going into business with her.
But how do you know if the two (or more) of you will be a good fit as business partners?
Done right, good partnerships add up to more than the sum of the parts. They can help expand capabilities, improve decision-making, and accelerate growth.
The wrong partnership, however, can lead to frustration, turmoil, and even the failure of the entire agency business. Various studies have found that somewhere between 50 and 70 percent of business partnerships fail.
So how can you tell whether a proposed partnership will be good or bad? There’s no simple formula or set rules, but there are some things to look for in building a solid business relationship.
It starts with talking to each other. A lot. Don’t jump into any partnership arrangement after one or two energizing conversations — no matter how well the two of you think you know each other.
A business partnership isn’t all that different from a marriage. You’re creating a legally binding connection between you and your partner(s) that can be tough to break. In fact, getting out of a business partnership can often be even more complicated than dissolving a marriage.
You need to make certain that you communicate effectively with your partner(s) — and that you enjoy doing so. There’s nothing worse than waking up every day dreading another conversation with a co-worker, let alone one who owns a chunk of the agency with you.
If one partner looks to the agency to put food on the table and the kids in college while another sees it as a fun sideline business, the odds for trouble increase exponentially.
In an ideal partnership, the agency fills the same need (financial and otherwise) for the individual owners. However, many agency partnerships get created in addition to another business that one of the partners may own.
If one partner can walk away from the business on a moment’s notice without feeling any real pain, that puts much more pressure on the one who relies on it for sustainable income. Over time it can lead to tension as decision-making gets clouded.
What do you each want to achieve from the agency business? Is one of you looking to generate a comfortable lifestyle income while the other wants to build to sell?
Good partnerships have owners who bring different perspectives to the business, but not on fundamental questions about where the enterprise is headed.
This doesn’t mean you need to be in precise lock-step, but you don’t want diametrically opposed visions either.
Individuals bring their own strengths and weaknesses to any partnership. That’s one of the great values of bringing in an additional owner for any agency.
But each owner needs to have a similar commitment to helping the agency succeed. That means putting in the same amount of effort and work to achieve the agreed goals.
Countless partnerships fail when one owner sees another as slacking off or not giving it their all.
Clearly Defined Roles
If everyone is in charge of something, nobody is in charge. Partners need well-defined roles and responsibilities to avoid excessive finger-pointing when something falls through the cracks.
This doesn’t mean that individuals won’t have overlap. They certainly can. But knowing who is ultimately responsible for operations, business development, and other key tasks helps to avoid situations where everyone assumes the others are pulling the weight.
It’s likely that your partnership has individuals with different skills and talents. Take advantage of that when you’re contemplating how to divvy up responsibilities.
Just as a marriage won’t survive suspicions about one’s spouse, neither will a business partnership. There needs to be complete trust between the owners to ensure that everyone operates at maximum effectiveness.
This is somewhere that you need to trust your own gut. If you have doubts about your partner, listen to them. If you can’t resolve the concern with facts rather than simply talking yourself out of it, there’s likely something amiss.
Even if your mistrust is ultimately unfounded, the mere existence of the concern will lead to poor decision-making and unnecessary stress. Don’t go into a partnership with any unresolved trust questions lingering — and address any concerns during the partnership immediately so they are not allowed to fester.
You can’t hide things from your business partners. That goes not just for business issues, but also relevant personal ones, as well.
Every partner needs a clear view of the business, from client happiness to financials and everything in between. But you also need to be open with each other about things going on outside of work that may impact your commitment or decision-making.
The more transparent you are with each other, the more successful your agency business will likely become. On the flip side, if you’re keeping secrets from each other, failure is likely only a question of time.
Checks and Balances
Even with the best of intentions, partners will face challenges over the course of the business relationship. That’s why an effective partnership agreement is important. It will help define how to resolve any conflicts when they arise.
But good checks and balances go beyond the legal documents. Putting policies in place can also help to ensure good governance. For instance, partners should never write checks to themselves from the business account without clear authorization from the others. While there may be nothing wrong with any individual transfer, you simply want to make sure there’s no room for the perception of misdeeds.
Similarly, in an age of heightened awareness of workplace misbehavior, employees need to have a clearly-defined path to partners outside of their chain-of-command to express concerns.
Each Partnership is Unique
While these characteristics help describe elements of a successful agency business partnership, it’s not a complete list. And some mismatches can be overcome through careful planning and understanding of the differences.
The key is to work with your partner(s) to ensure compatibility in achieving a shared set of goals. Never enter in to a business partnership lightly and carefully examine all of the pros and cons to ensure it’s a good fit.
Once you become partners, you all need to work together to continue to nurture the relationship and ensure that even as the business and life circumstances evolve, you’re well-positioned to keep moving forward together.