Partnerships

I've found there are lots of people in a long standing business partnership who are not satisfied with the status of the relationship. They may feel stuck, frustrated, angry...or all of these. They know they've been silent far too long, but just don't know what to do.

What can cause such a change in a relationship that started out with high hopes and good feelings?

Here are some of the situations I see most often. Do any of these apply to your partnership?

One partner feels like he's carrying the bulk of the workload.

This may have happened because there wasn't an agreement about who would do what. Job roles, responsibilities and accountability have not been discussed.

Expectations are not being met.

Expectations may be quite different for each partner. When expectations aren't met, it's a set up for negative feelings. It's important that each partner knows what to expect from the others.

Partner has lost interest in the business or changed thinking.

Over time new attractions and options will continue to present themselves to all partners. When a partner becomes disenchanted with how the partnership is going, she is more likely to lose interest over time.

Can't talk to each other.

Communication is so critical to maintaining a viable partnership. When partners get so busy doing their own thing that they can't find time to sit down with the other(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to talk about certain things.

It's a wrong partnership.

Sometimes the partnership has been a bad match from the beginning, but it was maintained for a variety of reasons. When the primary reason for the partnership was based on personal needs more than on business needs, if those needs aren't fulfilled, the partnership will flounder. Maybe one partner thinks and acts fast and the other wants to research things in great detail. These people may never be able to function well together. Basic behaviors and traits will not likely change even if the person tries.

Are any of these your concern? How do you open the subject of improving the relationship for the good of the company? NOTE: Even if you think it may be a wrong partnership, it's worth making the effort to see if it's salvageable.

Be proactive.

If you want things to change, it's up to you to change them. Make the decision you're going to break the status quo, but you're going to do it strategically.

Be clear about what you want.

Start by thinking about what you want for yourself and the business. NOTE: Use the Partner Questionnaire to help you organize your thinking. You can ask your partner(s) to do the same and compare notes or you can determine what you think will work and present it to your partner for feedback.

Schedule time to talk business.

Once you have thought things through it's time to schedule a time to talk business. Give your partner plenty of lead time and full disclosure about what the meeting is about. Let him get prepared for the meeting, but don't let it be put off because he "doesn't have time".

Discuss actions you're each willing to take.

Be prepared with actions you are willing to take. You can request or suggest actions from your partner, but leave the topic open for discussion and agreement.

Write a PLAN for agreed upon changes.

Once you reach agreement, set Goals for yourselves and the business. To keep things moving in the right direction it's a good idea to schedule periodic meetings to iron out details. This is the perfect time to start the habit of regular planned communications.

Set a timeframe for evaluation.

Three months is a reasonable timeframe to see if the Plan is achieving the results you want. Schedule an actual time where you will sit down together to see what has been accomplished toward the Goals you set. If you see progress, you may want to give it another three months.

If your evaluation tells you there is no hope, it may be time to make that very difficult decision to end the relationship. If you can't come to agreement or you're clearly going in different directions, it's probably time to part ways. Why waste any more time on a losing proposition?

Yes, it's like breaking up a marriage. But sometimes it has to be. Rather than feeling defeated, congratulate yourself on gaining the freedom to move on to something better.

Take a good look at your partnership and decide if it's time to take action. Start by downloading the Partner Questionnaire at www.primestrategies.com/partnerquestion, answering the questions yourself and then asking your partner(s) to do the same. Then plan to sit together and review your answers. It's a great way to get the dialogue started.

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If you are considering entering a business partnership my first advice is don't do it. However if you need a partner watch this video.

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Many times partners in a business start out at the beginning of the business excited to go into business with each other.  Each has their own separate skill set that they bring to the table, whether it is in sales, production or operations.  Many times their background is in a large corporate environment and they yearn for the ability to call the shots themselves.  Just as in a marriage, they may not spend the time to talk about the problems that they may have down the line in the business.  These issues may involve control of the business, responsibility for various aspects of the business, nonperformance issues, capital needs, to name but a few.  How can these issues be resolved?

All of these issues require healthy communications between the parties.  If the parties are unable to talk, especially in this tough business climate, consider using a facilitator to listen to the conversations and keep the conversation on a business plain and not allow it to get into personalities.  Here are some other ways to allow the tough business conversations to proceed to a successful conclusion.

First, find out the real facts.  If you are relying on “facts” that are really gossip or are not truly the facts, you may be furthering miscommunication or misleading information, at best.  When gathering the facts, don’t rely upon conclusions. Quantify the facts in terms of dollars and cents or number of units sold or percentage of sales, rather than stating conclusions.  State the source of your facts in a memo to the other parties that you will give the other parties before you discuss the matter.  Before you give it to the other parties, if time permits, let the memo sit for a day or two.  You may find other information which resolves some of the issues.  Along with the memo of facts which states the source of the facts, make sure to have an agenda for the meeting that you give to the other participants.  Give the other parties the time to digest the issues.

Second, if you have an issue or disagreement with one of your business partners, don’t ignore it, as it will only fester.  Face the issue and talk things out with the other party sooner rather than later.  Keep the conversation civil and respectful in your discussions and do what it takes to move forward to a fair resolution.

Third, be an active listener in the conversation.  Your business partner has another perspective that you have not heard and you need to examine the basis for that person’s point of view.  That perspective may also be based upon facts, as well.  Try to understand the other side’s perspective and keep an open mind.  The parties need to make this commitment to move forward through sometimes painful, unpleasant or sensitive issues.

Fourth, if you find that you or the other persons are unable to keep the conversation respectful or unemotional, you may have to hire a neutral third person to act as a mediator.  The mediator can help to facilitate you through the awkwardness of your communication, miscommunications and the pains of the conflicts between the parties.  You can also consider using “experts” who can bring in more information, such as accountants, lawyers, insurance experts, human resource experts, to name but a few.  The new information that these experts may bring may open the doors to some solution to the issues.

You may find it unusual for an attorney to talk about communication between business partners, however, if you do not communicate properly and regularly with your business partners, this may lead to further conflict and perhaps significant legal expenses to try to diffuse the conflict that ensues.  It may seem like common sense to state that it is better to “nip it in the bud,” but one would be surprised how often that does not happen.

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“I chose the wrong person.”

“We didn’t share the same expectations.”

“It turned out that our ethics were very different.”

Just like marriages, business relationships can break apart for fundamental reasons.  Whether you’re in search of new business partners or you’re already hooked up, there are smart things you can do now to strengthen these relationships.

This article contains some important tips on how to protect your business from the risks of business partnerships.

What should I do?

By definition, a business partnership is an agreement to equally or unequally share the ownership, responsibilities, risks, and profits of a business.

The three primary causes of business partner relationship problems are unshared expectations, unshared goals, and poor communication.  To eliminate these threats, do the following:

Select business partners with ethics and values as close to yours as possible.  Ask what is most important in their lives.

Look for people who in their conduct with others exhibit a high level of mutual respect.  If you see behavior that troubles you, consider this an early warning sign that shouldn’t be ignored.

Ask prospective business partners about their vision for the business.  Write down the vision statement of each prospective business partner.

In business partners, seek to obtain skills that you don’t have and willingness to perform tasks that you don’t especially like.

Talk with others in the know to find out about the work habits of prospective partners.  Watch for signs of laziness or looming personal issues that will take the focus away from your business.

Define clearly the roles and responsibilities of each partner, including the time to be spent by each partner and the respective financial investment by each partner in the business.

Define clearly the work location of each partner.

Address the legal issues of your business partnership, including the liabilities of each partner, with competent legal counsel selected by you.

Make it clear how final decisions are to be made if partners disagree.

Decide who will manage the financial books of the company and who will audit them.

Establish and maintain predictable, regularly scheduled communication with all business partners.

Determine the terms under which a partner may sell or transfer ownership of his or her share of the business to others.

Do You Need Help?

For specific help with your business partner relationships, contact Sylvina Consulting at 503.244.8787.

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If you are considering an opportunity to enter into a partnership, then you must realize that a partner will offer something of value to your business. Also know that a conflict with a partner can seriously impact your business.

A business partnership is like a marriage; you cannot just fire your partner, as you can an employee. Your partner has an ownership interest in your business. Severing a partnership is a legal action, like divorce, and it can be very expensive, even leading to bankruptcy.

You must make this decision wisely; be sure that you are entering into the partnership for the right reasons. A friend or family member does not make one a good choice for a business partner. They must bring something of value that you need to run the business, whether it be money, knowledge & skills in a specific area, or attributes essential to your success.

Another key rule to entering into a partnership is to never go into a 50/50 partnership. Someone has to be in charge. If there should be a disagreement on a business decision, where the authority is 50/50, you will have come to an impasse where you will experience in-action.

It is fine to agree to a 50/50 revenue split, but one side of the partnership must be at least 51% managerial. This must be decided on upfront and understood that one of you will make final decisions. The one who has the 51% managerial position will promise to ask, seek council and respect the opinion of their partner before making the final decision.

Another important document that needs to be included in your partnership agreement is a Buy/Sell Agreement with a separation clause describing how one will buy the other out if one should want to leave the partnership for any reason. Whether it be due to disagreement or just because one is moving on to do pursue something different, it is very important to have a separation agreement in place ahead of time.

A business partnership has a greater chance of being successful if it is properly set up with a complete partnership agreement in place. The agreement must delegate who is in charge, the economics of the business, and the separation clause.

Some of the biggest businesses today began as partnerships; partnerships can be successful. But, be careful and make good choices at the beginning. A partner must bring value to the business and you must enter the partnership for the right reasons.

Bill Bartmann has experienced business partnerships. He will share his experiences and everything he has learned with his online course, Billionaire Business Systems. Learn the steps to forming a business partnership and all essentials of business success at http://www.billionaireu.com

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Verbal agreements tend to never work out. Putting the terms of the partnership in writing is the smartest thing you can do to protect your business. Spelling out the rights and responsibilities in a written partnership agreement will better equip you to settle conflicts if they arise. You'd be surprised how minor misunderstandings can erupt into full-blown fights. Also, when you don't have a written agreement saying otherwise, your state's laws will control many aspects of your business.

Having a partnership agreement helps your business in many different ways. It clearly defines each partner’s role and it will structure the relationship in a way that suits the business. In the agreement you can define how you and your partners will share profits or losses, what will happen if a partner leaves the business, and other guidelines you or your partners think are important.

One area all partnership agreements cover is the name of the partnership. You can either use your own last names, such as the famous business partnership Smith & Wesson, or use a made up name like North side Technicians. If you do choose to make up a name then you must make sure the name isn't already in use then file a fictitious business name statement with your county clerk.

The second area most business partnership agreements cover is the contributions to the partnership. It's important that you and your partners write out and agree to whose going to contribute cash, property, or services to the business. Also, agree to each partner's ownership percentage. Partnerships who don't outline these terms tend to fall apart when disagreements over who has to do what occur.

The third area most partnerships agreements cover is the allocation of profits, loses, and draws. This tends to be a critical area in determining the success of a business partnership. How will profits and losses be allocated? Will they be allocated based on each partner's percentage of ownership in the business? How will profits be distributed and when? This is an area where each partner should pay particularly close attention to the terms their agreeing to.

Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as legal advice or used to make legal decisions. Consult an attorney in your area if you’re seeking legal advice.

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I've found there are lots of people in a long standing business partnership who are not satisfied with the status of the relationship. They may feel stuck, frustrated, angry...or all of these. They know they've been silent far too long, but just don't know what to do.

What can cause such a change in a relationship that started out with high hopes and good feelings?

Here are some of the situations I see most often. Do any of these apply to your partnership?

One partner feels like he's carrying the bulk of the workload.

This may have happened because there wasn't an agreement about who would do what. Job roles, responsibilities and accountability have not been discussed.

Expectations are not being met.

Expectations may be quite different for each partner. When expectations aren't met, it's a set up for negative feelings. It's important that each partner knows what to expect from the others.

Partner has lost interest in the business or changed thinking.

Over time new attractions and options will continue to present themselves to all partners. When a partner becomes disenchanted with how the partnership is going, she is more likely to lose interest over time.

Can't talk to each other.

Communication is so critical to maintaining a viable partnership. When partners get so busy doing their own thing that they can't find time to sit down with the other(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to talk about certain things.

It's a wrong partnership.

Sometimes the partnership has been a bad match from the beginning, but it was maintained for a variety of reasons. When the primary reason for the partnership was based on personal needs more than on business needs, if those needs aren't fulfilled, the partnership will flounder. Maybe one partner thinks and acts fast and the other wants to research things in great detail. These people may never be able to function well together. Basic behaviors and traits will not likely change even if the person tries.

Are any of these your concern? How do you open the subject of improving the relationship for the good of the company? NOTE: Even if you think it may be a wrong partnership, it's worth making the effort to see if it's salvageable.

Be proactive.

If you want things to change, it's up to you to change them. Make the decision you're going to break the status quo, but you're going to do it strategically.

Be clear about what you want.

Start by thinking about what you want for yourself and the business. NOTE: Use the Partner Questionnaire to help you organize your thinking. You can ask your partner(s) to do the same and compare notes or you can determine what you think will work and present it to your partner for feedback.

Schedule time to talk business.

Once you have thought things through it's time to schedule a time to talk business. Give your partner plenty of lead time and full disclosure about what the meeting is about. Let him get prepared for the meeting, but don't let it be put off because he "doesn't have time".

Discuss actions you're each willing to take.

Be prepared with actions you are willing to take. You can request or suggest actions from your partner, but leave the topic open for discussion and agreement.

Write a PLAN for agreed upon changes.

Once you reach agreement, set Goals for yourselves and the business. To keep things moving in the right direction it's a good idea to schedule periodic meetings to iron out details. This is the perfect time to start the habit of regular planned communications.

Set a timeframe for evaluation.

Three months is a reasonable timeframe to see if the Plan is achieving the results you want. Schedule an actual time where you will sit down together to see what has been accomplished toward the Goals you set. If you see progress, you may want to give it another three months.

If your evaluation tells you there is no hope, it may be time to make that very difficult decision to end the relationship. If you can't come to agreement or you're clearly going in different directions, it's probably time to part ways. Why waste any more time on a losing proposition?

Yes, it's like breaking up a marriage. But sometimes it has to be. Rather than feeling defeated, congratulate yourself on gaining the freedom to move on to something better.

Take a good look at your partnership and decide if it's time to take action. Start by downloading the Partner Questionnaire at www.primestrategies.com/partnerquestion, answering the questions yourself and then asking your partner(s) to do the same. Then plan to sit together and review your answers. It's a great way to get the dialogue started.

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