Whether you’re looking to take your well-established business to a new level and bring on someone new, you want to start a new company and need someone to join you at the helm, or opportunities have presented themselves following the COVID-19 crisis, finding the right partner can mean the difference between short-term failure and long-term success.
At Accru Harris Orchard, we have many clients who’ve built successful business partnerships and we see a number of common traits among those that work well. Of the clients we’ve worked with to help build great businesses, here are four things we repeatedly see and that you should look for in a partner, whether you already have an established business:
1. The same goals
If your long-term goal is to build a multinational firm and your partner just wants a shop in Adelaide, you won’t get far together. The same is true if you have different ideas about the company culture or what target markets you should focus on.
Of course, goals may change depending on how successful the business becomes over time, but you need to be on the same page at the start about your values and objectives.
2. Complementary strengths and skills
You’re not great at everything, and you can’t expect a business partner to be, either. What you need in a partnership is to have strengths that work together for business growth. For instance, if you’re a big picture person, you may want to find a detail-oriented partner who’s going to keep an eye out for small stuff that matters on a day-to-day basis.
Ideally, when you’re first forming a partnership, you’ll talk about what strengths each of you has and how those strengths will help the company grow. And on that note . . .
3. Ongoing, honest communication
A business partnership is like other long-term relationships: You won’t always agree, but when you don’t, you have to be willing to sit down and talk things over. This can be difficult. Conversations about how to run the business or where money should go can get pretty heated. Prepare to communicate from the start – honestly, openly and regularly – about how things are going.
4. Clear expectations about finances
How much will each person contribute to setting up the business and where will additional funding come from? Your costs will vary greatly depending on whether you’re already up and running or not, but you should discuss with your partner how much financial risk you both can tolerate and if additional money will need to come from loans, venture capitalists, etc.
Remember, if the business is brand new, you probably won’t generate a profit your first year – and maybe not the second year, either. The number one reason most businesses fail is that they don’t have enough cash to pay the bills. The best thing you and a potential partner can do before signing any legal or business agreement is to meet with a financial professional and put together a plan of action.
