Is your future business partner sitting next to you?
When we consider the risks, creative input and hours of blood, sweat and tears that go into starting and building a business, it is critical to work with the right partners. Spats between shareholders, partners, directors or founders can ruin an otherwise solid business.
So, in the month of love, let’s look at how to spat-proof one of the most important relationships in the life of any business owner.
Pick Your Partners
While the idea of building a business with your high school best friend sounds idyllic, the needs of business relationships are vastly different from those first created on the sports field.
Typically, in business, the first two or three partnerships you make are going to be learning experiences and, by that I mean there will need to be mistakes.
You learn far more through error than you do through success. An ideal business partner will be someone who you have good chemistry with and respect. Respect is vital. Growth businesses are seldom, if ever, built by one person alone.
If you go the partner route, be sure that between you, you bring these three capabilities to the table, ensuring that one plus one equals three.
Avoid a partner that brings exactly what you bring because when one plus one equals one, conflicts will emerge. Who’s sitting next to you on this flight? A little conversation could lead to remarkable things.
Talk, Then Walk
Truth is found in action, and that’s why you need to talk with your partner, before you walk a business journey with them. Before you sign a long-term contract with a new partner, start with a small project.
That way, you’ll learn more about your individual strengths, weaknesses and, importantly, how each of you face a business challenge.
Sign The Contracts
The best business partnerships are based on clearly defined roles and a robust contract. Set out the rules of your partnership, and directly detail everyone’s roles within the business. No matter how great your partnership may be, it always needs a contract.
Be Clear About Why You Do Business
You need a business partner who is, as they say in Thailand, same-same, but different. Your objectives for the business must be the same, but each of you approach problems from different angles.
Conflict within a business, especially that of your competitors, can also be an opportunity. Here’s why:
The Best People Leave
If you’re scouting for great talent, a rival company may have the people you’re looking for. In times of uncertainty or conflict, the best people often leave, giving you the opportunity to make them part of your team.
A Fresh Start
If your shareholders are in ceaseless conflict, it gives you an opportunity to take the next exit and put your energy into something new.
Alternatively, when shareholders exit, you can sail your ship with a new crew. In both cases, there are opportunities but action is the key.
Time runs out for us all and maintaining the status quo of conflict serves no person and will certainly erode what value is left in the business.
Time to Acquire A Stake
When a shareholder leaves a business, you may be able to buy your way into owning a piece of that business, at a far cheaper rate than if the business was not experiencing a conflict situation.
If you opt for this route, the likelihood that you get cooperation from both the exiting and remaining shareholder is high. The exiting shareholder wants out, fast, when that’s the decision he has taken.
The remaining shareholder wants to get the business going once again with its progress having been stalled during the period of conflict.
Reflection leads To Reinvention
If shareholders or partners manage to resolve the internal conflict, it’s a great opportunity to reinvent, or transform, the business. A shakeup can give your business a whole new lease on life.
It might also be a good time to get a third-party facilitator involved – someone who understands business and specifically moderates and adds to discussions about where to take the business and how.
Pavlo Phitidis has over 25-years-experience investing in, starting, building and selling businesses. He is the co-founder of Aurik investment Holdings business growth services. Pavlo’s book, Sweat Scale $ell, offers business owners practical insights to implement in their own business, to drive growth and deepen value.
Words by Pavlo Phitidis