STARTING AND MANAGING A BUSINESS FOR PROFITS AND WEALTH
Part 17: CHOOSING PARTNERS
In my years of working with entrepreneurs from startup to going IPO, the most common challenge faced by most of them is not necessarily external. Most of the time the problems that wreck a business and some times to the point of self-destruction are internal. A large part of this comes from conflict between the owners or partners. Often, businesses break down not because the business is not doing well or that it is not viable. In fact it has been said that when a business makes money the owners turn their attention to each other and bicker over the spoils of their success. So choosing partners is a critical step in business; as important as building the business itself. Here are some suggestions:
1. Don’t confine your choice of partners to your best friends only
I am of the opinion that best friends do not always make best business partners. There are exceptions of course but I am sure we have come across so many cases of friends going into business and ending up as enemies. So not only do they lose their friendship, they also lose money. If these friends of yours are merely investors and does not get involved in the operations of the company ,it will probably stand a better chance of success.
A partnership last because there is inter-dependency; there is a need for each other and that there is a role for each person to play. Hence my second suggestion….
2. Choose people who have what you don’t have; Leverage
I define leverage as finding people who have what you don’t have and work with them. This applies to alliances, collaborations and to partnerships as well. I teach my students the RICE formula; R: Resources which cover Time and Money, I: for Ideas, C: for Contacts and E: for Expertise.
So when we choose a partner we need to be clear which part of the equation the person is contributing. When every one of the partners has an important part to contribute; interdependency is fostered and that is the strongest glue that would bind people together.
3. Set clear expectations from the very beginning
Partnerships breaks down when the partners feel that what they want (expect) out of the partnership is not fulfilled. They begin to feel that they are getting the short end of the stick. This feeling of being unfairly treated or not getting their fair share or doing more than the others are the virus that start the disease.
It is paramount for a successful partnership to start with clarifying the partners’ expectations from the very beginning. Unfortunately, most Asians have a tendency to keep things in their head and feel ‘not nice’ to bring these stuff out in the beginning. After all, it looks like a happy union of good people.
The issue of expectation is not only when the business start but also when it is doing well. When a business do well, expectations can change. So constant communication and openness amongst the partners are ingredients to maintain a long-term partnership.
4. Nurture the partnership and pay attention to the other person’s needs
As the previous point states, there a need for certain ‘ingredient’ to maintain a long-term partnership. There are as follows:
a. Constant communication and openness
Keeping each other informed of what we do help to build trust and a culture of openness. This would enable the partnership to clear misunderstanding and miscommunication early. I always say: Silence breeds suspicions.
b. Give in order to receive
Be willing to put your partner’s interest as important as your own or even more important. This is one sure way of building strong partnerships. Long-term relationship comes from every one winning. Nobody can sustain a relationship if he keeps on losing( or feel that he is losing). So the perennial question we should ask ourselves when we go into a partnership is whether our partner is getting what they want rather than whether we are getting what we want. If every partner in a partnership gives; every one receives. Be the one to start giving.
c. Emphasize brightness of the future
If the realization that the future is great, if we stick together rather than to do it otherwise, the thoughts of breaking up will probably reduce. Having a vision and constantly driving the partners’ energies towards a common vision will take their mind from small petty stuff, which tends to get in the way. Hence when business is successful and there fore sometimes become complacent, that is when the problem begins. It would be better to set big audacious goals that would challenge the partners and there fore harness their focus.
5. Carry out periodic reviews.
It is important for partners to sit down and do periodic reviews to give each other an opportunity to bring any issues of concerns out for clarification and for resolution. The faster these are taken cared of, the better it will be for the business. Pretending that these concerns do not exist will not help. So when we allow operational priorities to be more important; these problems will grow and undermine the entire fabric of the partnership.
So you think partnership is troublesome and you want to do alone? Well you can if you think you can do everything by yourself. However you will need to wear your underwear outside.