To benefit from a business partnership, adhere to a written contract that outlines expectations, deliverables, and how proprietary information will—or won’t—be shared.
Think for a moment about a few of the most successful corporations in the world. It is a fair bet to claim that none of them ascended to their peaks alone. In fact, they likely had partners who were critical to their industry rise.
Simply put, partnering with another company means sharing cumulative business experience to deliver a superior, more convenient product to shared clients or consumers. Some partnerships begin with a perceived business advantage and grow to benefit each company more than either could have originally imagined. On the other hand, in some cases, the perceived advantage either doesn’t pan out or seems to only benefit one of the parties involved. The bottom line is that business partnerships should be carefully considered and built upon a strong contractual foundation that provides clear expectations, deliverables, and shared proprietary information for the companies involved.
Here are a few suggestions to consider as you build a thriving business partnership.
- Before agreeing to a partnership, identify the strengths and weaknesses of your own firm. Doing so will give you an opportunity to do a deep dive on your team and your operations to identify where you potentially need help.
- Consider these questions:
- Is my goal in partnering to enhance my strengths or to supplement my weaknesses?
- Should I entirely outsource my areas of weakness?
- What level of dependence on my partner am I comfortable with?
This type of inward reflection will help you identify what the most ideal partner would look like and make your decision about whether to partner much easier.</p
Next, identify the potential partner’s strengths and weaknesses. They should possess several alternate skillsets that are complimentary to your own operation.
- What are the shortcomings of this prospective company?
- What is my level of exposure getting involved with this company?
- Do I run the risk of losing any current clients by partnering with this company?
Be sure to write down any pros and cons, questions, and goals you have in mind. These thoughts will come in handy when drawing up a contract, should you decide to move forward with the partnership.
Establish Expectations in a Contract
Any long-term relationship must be on a firm footing about expectations. Formally outlining them significantly mitigates the chance for issues to occur down the road.
Document all responsibilities and expectations in a formal contract. This legally binds both entities and shows a firm commitment to each other.
First, establish terms for the partnership. Typically, partnerships start with a trial period of 3-6 months that gives either company the right to pull out of the relationship. If the trial period ends and both parties are happy with the outcome, then a longer term with less flexible arrangements should be discussed and agreed upon.
Next, outline finances in detail. Both companies have their own profit margins to protect; it’s best to leave any stubbornness at the door when entering these negotiations. Open and honest dialogue that references reliable and mutually accessible data during these conversations is immensely important. Most of the time, the number that makes each party slightly uncomfortable is the right number.
Most important, it is crucial to outline the partnership goals, strategy, and logistics. The order of operations is something that will likely need to be tweaked over and over again to achieve optimal efficiency. This evolving aspect of the partnership is one that will need to be vaguely outlined at first and then firmed up in the contract once a more permanent relationship has been established. These items can take months to perfect and can only be achieved via consistent and transparent communication.
Perhaps the most important aspect of any relationship is communication. Be comfortable enough to communicate honestly with your business partner. If there is a point of contention and it’s not addressed, then both companies suffer the consequences, whether it is a matter of operational efficiency or breach of contract.
Keep your business partner informed of any speed bumps in joint efforts, and take the initiative to update your partner regularly on the status of projects you are working on together. It is a good idea to set up a weekly briefing to address any concerns, highlight what is working well, discuss the evolving logistics, and touch base on the pursuit of any co-dependent goals.
The prospect of being completely transparent with a business partner is a noble pursuit, but at the end of the day, there are times when you will need to protect the interests of your own business. There will be times when your should remain tight-lipped with your partner and withhold certain proprietary information. You can still be completely honest with your business partner and omit the information that you deem private. Navigating these conversations in a professional manner should not be taken personally by your partner, but rather be accepted as proper business etiquette.
Taylor Miller is a project specialist and marketing coordinator for Owner Builder Advisors, where he helps developers and owners navigate the construction process. He has been actively involved in the construction and inspection industries since 2016. Miller also manages marketing campaigns, social media, and document generation/compilation for both formal and informal application processes.