Business Partnership Essentials

Dorene Lehavi

• Publisher: De Gruyter
• Year: 2017
• ISBN:
  9781547400201
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Business partnerships are vital to the US economy yet their failure rate is alarming: 70% of them don't make it. Dr. Lehavi is leading the charge to reverse this statistic. As a business partnership relationship coach, she intimately knows the impact that these partnerships have on cofounders, employees, customers, families, local communities, and global markets. Business Partnership Essentials walks you through every phase of the process—from choosing the right partner and operating your business on a daily basis, all the way through to exit and planning for the unexpected. This book is not a book on business startups and so it does not address the finances of starting up a partnership, but rather, it focuses on agreeing on all aspects of your relationship with your business partner. Following Lehavi's guidance will ensure that you've done everything you can to help your partnership succeed.

Part I: Choosing the Right Partner

Chapter 1
Hook Up or Stay Solo: The Benefits of a Partnership

“Is doing business with a partner better than going at it alone? My answer is yes. Nothing in business is more rewarding.

Working together is much better than working alone.”

—Michael Eisner, CEO, Walt Disney Co.

Business is 20% technology and 80% psychology. This sentiment was shared with me a few years ago when I visited with Dr. William Crookston, now a retired professor of Clinical Entrepreneurship at the Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California’s Marshall Business School. Dr. Crookston admitted that business schools teach the 20% but give little attention to the other 80%.

My career, and this book, focus on the 80% psychology—or, as I prefer to say, the “relationships of business.” Whenever and wherever you learned about business, chances are you were taught that it is supposed to be objective and devoid of emotion. What I know for sure contradicts this mindset. The truth is, the avoidance of feelings is impossible. After all, we’re only human. As a business person, you may have developed a habit of denying your emotions, or not acknowledging and dealing with them, but they exist and are influencing you whether you recognize it or not. I challenge you to relate to business terms like “success,” “failure,” “money,” “cash flow,” “teamwork,” “production,” “management,” “hire,” “delegate” and others without having them bring up a tinge of emotion. Perhaps you feel happy, fearful, anxious, proud or shameful. You have your own distinct personality, which you don’t leave outside the office door. Maybe you are ambitious, joyful or dedicated. Perhaps you are prone to procrastination or you’re a workaholic. What ruffles your feathers a little? What pushes your buttons and sends you into an emotional meltdown? Maybe you love the people you work with or are constantly annoyed by one or more. Are you competitive or a team player? Well, you are feeling whatever it is that you’re feeling because business correlates to your very humanity. Although you may believe that you can take one part of you to work and keep the other part separate for your personal life, it is not possible. Pushing down your feelings or pretending they’re not real is an inefficient and unhealthy way to live. Your work affects all areas of your life because it is a large part of your identity and a source of relationships that fill your life. For better or worse, it is an outgrowth of who you are at any given moment in time, carrying with it all that came before in your life that brought you to “now” and prepared you (or not) to do whatever you are doing.

As I will repeatedly point out (because it is so key), all business is about relationships, a place where feelings thrive. The relationship between the partners sets the tone for all involved—from employees, customers and family members to the community and much more. When a local business closes, the loss is felt far beyond the personal lives of the partners; it extends into the community itself.

Because of the fallout—emotional and otherwise—that occurs when business partnerships fail, it behooves all entrepreneurs, solos, co-founders, partners and joint ventures to recognize the ripple effect that results from the way they conduct their businesses. Putting personal gain aside in favor of what must be done, without counting hours and minutes of who is doing more, will go a long way in making the partnership and business work well. The goal should be to have a well-run, profitable business, and the partners are there to make that happen. As we will explore, the attributes of trust, mutual respect and ongoing communication are essential keys. To this end, try the following exercise:

Around the Table Picture a conference table where two new partners are sitting on opposite sides discussing their roles in the business. They are making important decisions about the operations of the business, and about how expenses and profits will be divided. The discussion is about “the individuals.” Each one is thinking about what they are putting in and getting back. Now try this: Change the seating arrangement so that the partners are sitting next to each other, and “the business” is opposite them.

From this vantage point, they can look at the business’s needs in order to fulfill the vision they have of it. The discussion and decision making should focus on meeting operational needs such as finance, technology, production, sales and marketing. They decide who will be responsible for each. This sitting arrangement is more conducive to what is needed to succeed than the first scenario.

Advantages of a Partnership

Many solo owners of businesses occasionally toy with the idea of having a partner, yet remain ambivalent. In order to find the right partner, there has to be determination coupled with a clear picture of why you want a partner, as well as what each of you should bring to the table. That’s just the tip of the iceberg. There is much more, but let’s start by looking at the many advantages of joining forces versus going solo.

The End of Isolation

As those who are sole proprietors know well, it can be lonely at the top. As a solo entrepreneur, you are more likely to be doing most or all the work in your business yourself, rather than having time to build and expand it. You are most often alone in the decision-making process, as well as strategizing and visioning. With a partner, you will have someone with whom to share and discuss ideas, and weather the highs and lows. As a partner, you will also increase your opportunities to find time to build and grow the business as you share the day-to-day responsibilities.

Shared Risks and Responsibilities

Partnerships make the distribution of responsibilities possible. The fear and anxiety associated with taking risks can be mitigated with someone at your side who can offer reassurance and support. A partner may provide needed capital or a robust client base. He or she will see things from a different angle, thus expanding the company’s vision. Partnerships offer a chance to delegate some of the responsibility to another who is equally committed to the success of the company.

Aligned Individual Strengths

Sole proprietors are left to do most of the work on their own, regardless of personal strengths and weaknesses. As partners, the work can be more closely aligned with each person’s strengths, thus allowing everyone to focus on the work that best suits them. Inc. Magazine has dubbed Michael E. Gerber “the World’s #1 Small Business Guru.” In Gerber’s book, The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It (and subsequent E-Myth books) he says, “one plus one should equal three.” With each individual bringing his or her unique strengths to the table, new possibilities become feasible and, indeed, one plus one begins to equal three.

Two Heads (and Hearts) are Better Than One

The relationship between partners should be sufficiently intimate to allow each to be vulnerable with the other, without fear of being poorly judged for weaknesses, fears or discomfort of any kind. In strong, healthy partnerships, the partners are trustworthy people and will comfortably challenge each other, allowing for an examination of the issues from multiple perspectives. This can result in a higher volume of creative ideas and a larger offering of products and client services because more minds, hearts and souls are working towards a common goal. Conversely, spending time brainstorming with a partner can stop a solo decision maker from making a costly mistake.

Why Do You Want a Business Partner, Honestly?

Before you decide to bring on a business partner, it’s important to consider why you want one in the first place. Some reasons are better than others. The important point is to be honest with yourself first, then be willing to be openly candid with the partner you are considering.

In my experience, all successful partnerships say that trust is the most important element in the relationship. As author Stephen M. R. Covey asserts in his 2006 bestselling book, The Speed of Trust, “The ability to establish, extend, and restore trust with all stakeholders–customers, business partners, investors and coworkers–is the key leadership competency of the new, global economy.” He further explains that today’s leaders are rediscovering trust as they see it with new eyes. Looking beyond the common view of trust as a soft, social virtue, they’re learning to see it as a critical, highly relevant performance multiplier.

Trust is built on openness, transparency, commitment to each other as well as the business, and is the basis for building it. So, begin with being open and honest with what you are thinking. Tell your prospective partner that you want them because of their financial wherewithal, their reputation, customer base, connections or skill sets. Perhaps you simply don’t want all the responsibility on your shoulders alone. Can you tell them what you bring to the table even if you believe it is of lesser value for whatever reason?

This kind of openness will endear the right partner to you. After acknowledging whatever it is you can, then discuss important details for correcting any concerns about the situation, including a fair differential in financial compensation or time off. Perhaps the differential would be limited in time and evened out as certain benchmarks are met. All kinds of arrangements can be discussed and adopted when there is trust and respect based on transparent communication. By contrast, be aware that secrets and hidden agendas can create bad blood in a partnership relationship, dooming it from the start.

A Final Word About Going Solo

So yes, there are great benefits to having a partner, but partnerships are not for everyone. It is unwise to enter into a partnership if it’s not right for you or if the person you are considering is not a good fit. Always trust your instincts, pay attention to red flags, and if things don’t feel right, shake hands and walk away. A bad partnership can be worse than a bad marriage, and partnership divorces can be even more complex, costly and ugly than any divorce from marriage. As mostly anyone who has been through such a traumatic breakup can attest, it’s better to go it alone than spend years unwinding from physical, emotional and financial misery with the wrong person.

TIP: It’s better to remain solo than to choose the wrong partner(s).

***

So how do you even begin looking for your partnership match? When clients ask me how they can best find a partner, I advise them to tell everyone they know that they are looking, to attend meetings in their field, and to connect with networking groups and associations belonging to their industry. I also advise them to check online and join global groups such as CoFoundersLab.com, which offers a free membership and helps members find their business match. It is encouraging that Shahab Kaviani, co-founder of CoFoundersLab (a Onevest Company), notes “a growing trend by founders to be more selective in choosing the right partner.”

Before reaching out and beginning these networking activities, make doubly sure that you are very clear about your motivations for wanting a partner, what you are offering as a partner and what you are seeking. As a start, ask yourself a few of these basic yet essential questions and take some time to ponder the answers beyond the first ones that pop into your mind.

ESSENTIAL QUESTIONS:

–Why do you want a partner?

–Why would you be a good partner?

–What do you bring to the table?

–How do you rate yourself as a communicator?

–How do you rate yourself as a team player?

Let’s move on now to the three main components to building a successful partnership. They are simple to understand, challenging to do, but well worth it.

Chapter 2
Your Significant “Business Other”: Choosing the Right Partner

“If you fail to get it right at the start, it may cost you dearly to fix it later.”

–Curtis E. Sahakian, author,
Corporate Partnering: A How-To Handbook

The above quote is rather harsh, so I hesitated to open the chapter with it but forged ahead because what Sahakian says is true. This step is where it all begins and ends. If you get this right, then no matter what business you are in, your partnership will stand a decent chance of being successful. And so, we begin with the first of three crucial components in building a successful partnership: Choosing the right partner. This step is of paramount importance, yet it is where many people make a monumental mistake. Don’t be intimidated by Sahakian’s hard-won wisdom. As I walk you through this first phase of the process, you will discover that finding the right person is not only doable, it can prove to be a deeply and thoroughly satisfying experience.

As I’ve mentioned, many business partners would attest that their relationship is analogous to a marriage—and for good reason. Our cultural fascination with relationships often focuses on romantic partnerships rather than business connections, but as I say in the Introduction, marriage and business are more alike than you may realize. Both involve people working together to create and maintain a strong, successful, abundant, long-term, trusting relationship. They are required to bring unwavering commitment, a willingness to be transparent, always improving communication skills, and a shared vision for where each partner would like the relationship to go. The principles of giving, communicating, paying attention on a regular basis, trusting, and showing regard for each other are basic attributes that are critical to success in both marriage and business partnerships.

Before I have you saying “I do,” however, I’d like to engage you in a little bit of pre-marital counseling, if you will, to sa...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Part I: Choosing the Right Partner
• Part II: Planning for Your Future Together
• Part III: After the Honeymoon
• Part IV: Collaborations Is the New Currency
• Appendix A: Keys to Effectively Delegating and Having Time for Yourself
• Appendix B: Business Partnership Success Meter
• Index