Finding partners that have brand synergy and share similar markets can leverage your business and expand your customer base. But did you know at least 50% of partnerships fail in the first 2-3 years? This statistic alone may scare you into staying solo, but we have the insight to keep your partnership rock solid.
A partnership venture starts out as a brilliant idea between at least two entities. You agree it’s a good idea, you sign the agreement, get started and things may be great for a while. But then the cracks start to show. Based on conversations with business owners who’ve experienced partnership failures, here’s a list of nine tips to give your next partnership the best shot at survival.
- Complementing skill sets. Partnerships have been instrumental to many successful start-ups and the reasons are simple: complementing skill sets and a collaborative approach. But often partners with similar skills gravitate to each other. This may seem attractive for growing market presence, but it doesn’t create enough diversity, which is where many partnerships fall over. Ensure you have a mix of diverse and complementing skills to avoid too many cooks in the kitchen.
- Similar values and vision. Many of your partner’s values will impact the outcome of your venture – will they be willing to put in the work, and how will they respond in a stressful situation? Do they do what they can to keep going in a crisis, or will they pack up? Sharing similar values is imperative. You can agree to disagree in different areas of the business, but at the end of the day, partners should also share a similar vision. One partner may be reliant on carrying out the next commission, whilst the other is thinking big picture and building the customer base. These differences may quickly become a deal breaker to make your partnership unstick.
- Balance effort. Sometimes one partner alleges to be putting in more time and energy than the other(s), which may be the case, agreed or not. Much of this comes down to the perceived value of the partnership venture and the time and resources available. So explore the value of the partnership, the return on investment, commitment, and resource requirements at the start. Then deal with any conflict more rationally via the terms of the agreement.
- Transparency. Openness and honesty are critical to every successful partnership. As one entrepreneur stated after three acrimonious partnership failures, “whoever controls the money, holds the power”. Whilst conjecture, this viewpoint represents that of many partners on the receiving end of poor transparency. Partners bringing hidden debts and agendas to the venture has also seen many partnerships crumble so ensure yours is transparent.
- Communicate. When communication breaks down, at least there is some recourse to figure out what went wrong, but a lack of communication is a symptom of lack of planning – who does what, reporting and accountability. So plan every step, variable and worst-case scenario to prevent your partnership unraveling and always keep your partner in the loop.
- Don’t move faster than you can manage. A new partnership can move very fast and that’s a great thing. But a partnership that moves too quickly without the inclusion of key personnel is heading for trouble. Without a good plan, change gets bogged down in resistance compounded by fear. Having an inclusive strategy that incorporates a change management plan is more likely to assist success.
- Have a dispute and exit plan in place. Peace of mind is knowing you have a feasible exit plan. An exit clause in your agreement defines what happens to intellectual property, profits, debts, clients and other considerations, in the event of, or when, the partnership venture ceases. This is particularly important if partners bring assets to a new venture which they wish to retain. Add a sound and clear dispute resolution clause into the formal partnership agreement and seek a mediator if necessary.
- Evolve. The business world moves quickly and the reasons for entering a partnership six months ago may no longer be relevant. Evolving your partnership and adjusting to stay relevant and feasible is key.
- One last thought, do you really need a partner? Consider why you are entering a partnership, and explore if there is an alternative to achieving what you want. A partnership should create something mutually beneficial for both parties which is greater than the sum of its parts combined. If you don’t see this value perhaps you should consider other options.
If you’re involved in a partnership, whether it’s a strategic alliance, joint venture, partnership in law, or anything in between, getting your business model and systems right are essential for success. Strategic partnerships and collaborations are just one way of attracting new customers. For more ideas on how to expand your customer base, download our eBook Eight Ways to Attract New Customers.