Business Partnership and Its Many Headaches

Business Partnership and Its Many Headaches

There have been several articles, talks, sermon or even thesis on the issue of partnership in Business.

Just like in marriage, there is no one-cap-fits-all approach to dealing with the issues that arises from forming or managing business relationships built on partnership.

I have been privileged to attempt several “failed” partnership in my relatively short time on planet earth. Yes, I called it a privilege because it has helped me to move from a place of assumption built on sentiments to a place of certainty built on empirical knowledge or facts as you may wish to call it.

I have also read a few articles and also heard the experience of most business owners with failed partnerships. Unlike their own experience, I left my “bad” experience with a positive attitude informed by lessons learnt from my dealing with former business partners.

No two individuals are exactly the same, hence partnership does not mean working with people that are exactly like you. It means having a shared vision, goals and great work ethics towards the business jointly owned.

Some people want to earn like a boss and work like an employee without a stake in the business. I totally agree with most business owners on the issue of work ethics as being one of the major sources of conflict in partnerships.

Even in a relationship of 50/50 equity holding between 2 partners, your partner may not be committed to carrying their own weight and the one who seems to be more committed tend to feel frustrated. Over time, resentment begins to set in thereby causing a strain in the relationship.

Indiscipline among partners is usually a trigger for laid-back attitude or non-commitment towards a successful partnership.

There is a saying among the Yoruba people of Nigeria, that even land that is jointly own should have some sort of boundary lines well drawn, even if it is jointly owned by father and son the records should be clearly set.

This is the principle of documentation. Most people claim to act on “trust” or gentleman’s agreement hence, they fail to do due diligence in defining terms and setting expectations straight from the onset.

Personally, I can’t do business with anyone who is unwilling or in a hurry to sign-off on an agreement. Sometimes people want to play smart, they don’t want to easily commit to anything that might put them on any form of legal obligation towards the partnership.

You hear things like “let’s just start and we can talk about paper work as we progress” or you hear things like “don’t you trust me?” such people are usually the ones that will tell you we didn’t sign any agreement and as such they have no obligation when the chips are down.

There are different types of partnership options available to every business owners irrespective of the stage you are in your business life cycle that you could consider, without emphasis on the fancy names you read in textbook, below are a few options you may want to consider;

  1. You could have partners that co-own the business with you (at an agreed equity share holding ratio) and also are involved in the day to day running of the business. The could have equal, minority or majority stake in the business. The key thing is that they are involved in the day to day operation of the business
  2. You could have those that own part of the business, but are not directly involved in the daily operation of the business. These are investors that put their money down and wants to own a part of the business without having to be burdened with the littles operational details. Their input is also required when making critical decision that affects the business
  3. You could have those that provide you with dedicated services to support your operation while you share profit with them. For example, you have a delivery business but do not own a storage facility. You could partner with someone that have such facility and agree on a special arrangement to use their facility without having to make initial deposit that may require huge funds. You only pay when the space is put on hold and payment is received from the client. Like a credit arrangement
  4. Another option could be to get people who can give you long term loans to boost your operation without owning any part of the business. Under this arrangement, you could be required to pay back at an agreed period for a fixed interest rate. I call this life-lines. This type of investment is often possible from friends or family members that are willing to loan you such money for an extended period of time

Because of my past experience, my personal recommendation is always for business owners at the early stage of their business should avoid getting into arrangements that can significantly limit their ability to take important decisions as regards their business.

The need to maintain control is key to ensure that the vision of the founder is not compromised by “investors” whose priority might be to make profit at the detriment of the business vision or mission.

Starting and managing a business in a lot of ways is like raising a child. Although you are open to all sort of help from well meaning relatives, most people will not want to have their child raised by someone else or raised under a different ideology or principle that conflicts with that of the child’s parent.

That is why I always recommend, partnership by collaboration. I only go into partnership with a person that aligns with my vision, and has any critical resource that I need. They will be compensated based on the outcome of projects we jointly execute while I maintain full control over my business.

For me, that way they make profit from whatever they might have invested, I am able to share the profit without losing the soul of the business in the name of expansion.

The principle of collaboration is the business model we adopted at Agama Communications Group which enables us to manage multiple relationships and work with different key partners in delivering the unique value preposition we guarantee our clients.

We work with strategic partners that we can easily outsource certain task to, while they take full responsibility to deliver based on pre-agreed KPIs. Rewards and sanction are based on performance and not just efforts. To avoid sentiment, we ensure communications are done formally, while we could use informal channels to amplify our interactions.

All action, plans and agreed decision are documented and signed off all parties to ensure that it serves as a reference points for any expectation that may be built by either or both partners in the future.

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This Post Has 4 Comments

  1. כנסו לאתר

    Everything is very open with a really clear clarification of the challenges. It was really informative. Your website is extremely helpful. Thank you for sharing!

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