When you have a business, it’s essential to find ways to grow your company. While partnerships can be an effective tool for growth, they also carry the potential for problems. Read on to learn how to manage your business partnerships so that you can avoid common pitfalls and increase your chances of success.
Have similar goals
For a successful business partnership, you and your partner should be on the same page regarding company goals. If you’re a startup but an established business with years of experience under their belt, there can be significant gaps between what each party wants out of the partnership. For example, if you wish to grow for your brand while they want exposure to new demographics to increase sales volume without any other long-term strategy at play, this is not likely to work well together.
Of course, having similar goals doesn’t mean that everything will go smoothly. When you don’t share values, there are high chances of developing regular disagreements. You should all have a list of action items or goals lined up so that everyone knows how things will go down from the start.
Communication should always be an ongoing process between you and your partner so that everyone is on the same page throughout. Once both of these pieces are in order, managing business partnerships can be a breeze. As long as both parties are committed and clear on expectations, managing business partnerships is pretty straightforward. Just remember that communication is vital, so always talk through potential pitfalls before they happen so that everyone can feel confident going into their new venture together. Time and money are in short supply when you’re a startup, so effective communication is more critical than ever.
Make it formal
Have a partnership contract that outlines what the partnership entails, how long it will last, and what is expected from each side. This way, you both can refer to something concrete if there are any misunderstandings or disagreements down the line. While some partnerships may not require this step, having a contract in place is one of the best ways to ensure everyone knows where they stand at all times. The legal documents for partnership can vary based on the size of your company and whether or not you have employees, so make sure to check with an attorney before making any formal agreements.
Establish a working business structure
Business partnerships such as limited and general or limited companies outline how the structure will work. If you and your partner contribute financially to the business, an LLC will probably be the best option for you. It protects against any personal assets being brought into the mix if there’s an issue with your small business, and it will make managing taxes easier when everything gets settled at the end of each year.
If one person owns all of their shares in a single-member LLC, they can even go solo without involving another party. However, this makes things more difficult down the line should they need additional funding. As soon as other people agree with them through investments, that would constitute a general/limited partnership on the basis of the number of partners.
Maximize your strengths
Focus on knowing your partner’s strengths and weaknesses, determining how you can maximize your partnership. Depending on each of your goals as a company, it’s essential for everyone involved to be aware of their role and responsibilities so that they don’t get in the way or overshadow one another moving forward.
Get a mentors` viewpoint
Getting an outsider’s perspective can help a lot and someone not emotionally invested in helping you sort through and resolving issues that may arise in your business partnership. Thus, both parties have a level head when making decisions moving forward together rather than getting caught up with personal differences or letting their emotions come into play. Having a third party involved can diffuse any animosity between the two of you, leading to some great friendships if managed correctly.
Managing and creating business partnerships can be challenging and takes time. Hopefully, by following these steps, the process will run smoothly from start to finish and be highly beneficial to your own company’s growth and success.