7 Ways Successful Business Partners Stay Together
Use these best practices to improve your business partnership’s success, longevity, and enjoyment.
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Those who have been in business partnerships know that it's not always a walk in the park. Everything starts off with grand ideas and big possibilities, but often, as challenges and obstacles crop up, conflict increases and the energy that got a partnership off the ground begins to wane.
Even the most successful partnerships go through tough times. In fact, successful partnerships are defined not by the height of their peaks, but by how well they can weather the storms of the valleys. Great partnerships put systems in place to keep members aligned and focused on the same goals, actively work to address differences before they blow up into open conflict, and put in processes to ensure that everyone is being treated fairly.
Here are seven things successful partnerships do to ensure they last as long as possible and are highly successful for everyone involved.
1. Define your core values, purpose, and vision
All conflict resolution is based on finding a higher purpose to overcome differences. Without a strong set of values, purpose, and vision for the future, partnerships are forced to work from one short-term agreement to the next.
However, once you have the bigger picture well-articulated, it becomes much easier for bigger ideas, plans, investments, compromises, and strategies to develop. Partners who share a strong vision of the future can make bolder, longer-term moves because they are clear on the end goal and driven by purpose.
2. Separate initial contributions from ongoing contribution
There are many levels of involvement in partnerships. Some members may be involved on a full-time basis, some may only be contributing assets, ideas, or even just reputation.
Separating initial contributions from ongoing contributions allows you to more easily quantify and track everyone's investment and exposure. In this step it's also a good idea to separate ownership from management. Decide who is going to be working in the business and who is an outside advisor, and then compensate them appropriately based on market rates.
3. Focus on equitable, not equal
Many partnerships make the mistake of trying to make everyone equal partners, going through hoops and contortions to make things perfectly balanced. Instead, make sure everything is equitable.
Calculate what people contribute to the business and share equity, rewards, and costs accordingly. In my partnerships, we convert everything into points that are used to calculate equity. Money, time, ideas, assets, and reputation are all converted into points to define equity splits.
And as time marches on and people make additional contributions, additional points are allocated and updated. These can include or exclude control and decision-making rights.
4. Define your roles and measures of success
Defining roles and responsibilities are keys to the success of any business, but it's twice as important in partnerships. Good partnerships get super clear on who is doing what, how success in each role will be measured, and how to hold each other accountable for delivering on expected results. When someone comes up short, the team works to support him or her and, if need be, the team redefines roles to make sure the best and most qualified person is taking on the jobs that need to be done.
5. Decide how to decide
This is critical in large partnerships, but even in smaller ones, defining how decisions will be made is key to smooth operations. Great partnerships have a well developed and balanced governance process.
They have a documented process for who will be involved in which decision and in what capacity before decisions need to be made. This gives them a clear path to follow. And they know that too much formality will bloat the process while too little creates conflict and turmoil later.
6. Have a plan for when you disagree
Disagreement is inevitable. It's impossible for everyone to agree on everything all of the time. Have a plan for what to do when you reach an impasse.
For lower level decisions, you may agree that one partner or another will have the final say. For mid-level decisions, you might agree to bring things to a vote. For major issues, you can agree upfront to have formal resolution processes that uses third party coaches, mediators, or arbitrators.
Furthermore, I always suggest that partnerships have a clear and precise dissolution/buyout process that maximizes the value of the company in case you reach a deadlock situation.
7. Quarterly partnership review and plan
One of the best things you can do as a partnership is to review what's working, what's not, and what changes need to be made to keep everyone aligned, on target, and fully engaged. I do quarterly reviews with my clients where we actively encourage issues and concerns to be discussed so that we catch them before they exacerbate into conflicts.
We also use this time to celebrate success and recognize the important and valuable work which has been accomplished. These small course corrections can help avoid major issues in the future.
While no partnership is without differences or challenges, partnerships that last do so because they make a point to take the time and energy to stay together. Expecting that a partnership will just work on its own and take care of itself is a recipe for trouble. Partnerships take work, and the sooner you do it, the easier it is.