Partnerships can be essential for launching and growing young businesses but they also have the potential for blowing up and resulting in financial disaster for those who aren’t prepared. What do you need to watch out for and what do you do when your partner isn’t holding up their end of the deal?
It doesn’t matter whether you are considering taking on a partner for getting your business idea funded and off the ground or if you have been approached with a partnership proposition to collaborate and cross promote services with another organization, the wrong partnerships can not only destroy your dream business but ruin your reputation too. Watch out for these 5 deadly business partnership killers…
Personalities and values that do not gel are probably the number one reason business partnerships fall apart. It doesn’t matter how much you think you need the money or how much you think a partnership can do for your brand visibility and growth, if you smell potential areas of confrontation up front, run the other way. It’s like that really hot date who turns out to be the boyfriend or girlfriend from hell as soon as they move in and we all know what divorce does to those involved in marriages.
All those things which slightly alarm or annoy right now are likely to only get bigger once the ring goes on. This applies equally to joint partnerships, taking on investors and affiliate partners. Focus on finding a partner who shares the same values and it has the potential to take you and them to the top. On the other hand it you find your partner beating the IT guy in the conference room or verbally abusing your valued vendors cut ties immediately.
2. Wrong Expectations
People see things differently and often have different expectations of relationships than you do. Make sure that you are 100% on the same page from even before day 1, don’t assume it. Define the workload, responsibilities, minimum production, returns and goals so that there is no question when one party is failing to live up to their end of the deal.
3. Interests & Focus Grows Apart
Entrepreneurs and organizations are constantly evolving and chasing new opportunities, passions and trends. Expect it and plan for it. Put a system and structure in place up front for regularly assessing the business relationship, whether it should continue and where it needs work. This way either party has the opportunity to exit gracefully without an epic battle ensuing.
4. Someone Drops Out of the Race
Worse than just changing focus, sometimes partners just completely drop out of the race. They find a new relationship, personal or business and let yours go. Their spouses leave them and crush their will to live or the rapid success you are experiencing causes them to go off the deep end, giving them the ‘rock star’ status feeling and they begin to spend a lot more time partying than showing up for work. Decide how far you can afford to go in helping them and when you are going to have to cut them loose ahead of time and let them know.
5. Naivety That it Will All Work Out Fine
Many approach business partnerships with the misconception that if everything is going well and money is coming in, everyone will be happy and get along and if the idea crashes and burns there will be nothing to fight over anyway. Unfortunately, things are never this simple. If your business is tanking someone is going to want to seize control to salvage the resources they have put in and even if things are going great, if one side isn’t making as much money as the other jealously can quickly creep in, whether it is deserved or not. Have a real written agreement and contract in place that will guide you when things don’t go exactly as planned.
What to Do When It All Falls Apart?
Every industry has a trail of dead partnerships lining the road to success. Despite your best intentions, work efforts and patience, sometimes it just doesn’t work out. Unfortunately this is no time for niceties. You may want to end things amicably but the odds are the other side won’t and it is the one who acts first and decisively who will come out better off. Be aggressive, consult your attorney, act to protect your rights, control funds and assets. Otherwise you could find yourself locked out of your own office, bank accounts and being served a lawsuit.