SUCCESSFUL PARTNERSHIPS

Many of our clients are in business with partners. They include: husbands and wives, brothers and sisters, fathers and sons, mothers and daughters, people who’ve been best friends since elementary school or associates who went into business because they happened to have their entrepreneurial moment together.

A successful partnership boils down to three things: communication, structure and the best person in the right job. Communication must be regular, open, non-assumptive, listening-based communication in order to maintain a foundation of respect and collaboration. Equally important is creating a mutually agreeable structure so that all partners understand their roles.  Lastly, is to identify the specific talents of the each partner and put them in the best position to leverage these talents.

Communication

Success lies in staying aligned and not falling into the non-communicative trap, is usually the first critical error that destroys partnerships. Communication continues to be one of the biggest obstacles for all business partners.

You probably ‘talk’ to your partner, however you might feel that you talk to them without address those critical issues, because you just don’t want to start a problem. But that doesn’t mean you’re communicating. True communication involves active listening; it’s about being open and non-assumptive. It’s essential that you hear your partner and understand his/her point of view on the business.

As partners, you should meet regularly with a clear agenda and defined objectives. If you have a board of directors, you include them. Either way, this regular meeting should be a coming together with the purpose of discussing vision, strategy, execution, implementation and plans.  From the ownership perspective, a regular meeting like this creates trust and unity. It also creates an environment to have deep discussions and sometimes confrontation in a safe environment with the partners and key persons involved. You emerge with a clear set of shared goals, values and direction for the company. This ownership meeting is a place to practice authentic regard for your partner and acknowledge each other’s contribution. Like most people partners need validation and appreciation and the best way to receive it is to create an environment to facilitate correct air of sharing and growing.

Structure, Structure, Structure

Next to lack of communication, the lack of structure is the second biggest obstacle facing business partners. By creating a structure this allows a regular venue to communicate as owners out of the business.  Furthermore, you define specific roles in the organizational structure so that you know who does what and who reports to whom.

The “owner” is not a position in an organization. Sure, you can get by with calling yourself that with your first or second employee, but as you grow -- and particularly when you have a partner -- getting organization and ownership clarity is critical. When you’ve defined responsibilities, each of you is freed to excel with purpose and direction.

You both can’t be CEO's

Co-CEO’s just don’t work. But, there’s always an exception to the rule – but it is not recommended. It seldom works and you can avoid a lot of difficulty by accepting it. Someone has to take on the chief leadership role and the other partner or partners need to report to them to replicate the proper structure.  Do you have a formalized system to identify the ‘best’ person with the ‘best’ talents to assume the role of the CEO?

Being in a business partnership presents challenges, especially when you add the emotional aspects of a family or friend relationship business logic seems to evaporate from the conversation.  But if you share similar values and vision, if you meet regularly as owners, create a united leadership and have clarity and agreement in your organizational structure, you’ll have a very strong foundation from which to grow your business.

What is your Exit Strategy?

When does your Exit Planning start?  Answer: The day you start your business.

Attorneys practicing Business Law have large billable hours from unhappy business partnerships that fail to properly plan for selling, transitioning or exiting the partnership.  Statistics prove that the majority of businesses fail to survive past five years, so why not have an Exit Strategy plan in place to make allowances for this provision? 

Have a plan or strategy in place for the “5-D’s” in Exit Planning:

·       Death

·       Disability

·       Divorce- Personal

·       Divorce- Business

·       Departure (or retirement)

It is also recommended that you sit down with your Financial Advisor, your Attorney, your CPA and your Business Coach annually. This annual review includes scrutiny of your:  Partnerships Agreement, Wills, Key Person Insurance, Buy-Sell Agreement, Exit Plan, Directors and Officers Insurance, Differed Compensation Plan, Long Term Disability, and Retirement Plan.

When was the last time you updated YOUR Plan, and make the provisions for “What If . . . .”