by Charles Odii

Week 4 of #AskCharlesOnY!

Dear Charles,

What’s your advise on partnership in business, how do I get the right business partner? Because I don’t want anyone to come outshine me in my business or take over the business I started.

Response

Collaborating with a partner(s) can be a good way to get your business off the ground and is especially useful if each have different skills to bring to the enterprise. For instance if you are a sales man, you can get a technical partner; while you handle the marketing communications for the organization, he can be focused on product development and quality control.

In the case where you have already started your business, examine it to be sure you need a business partner and that the partnership is critical to the success of your business before getting into one. It may simply be that you need an employee to bring in relevant skills you lack, and not necessarily a partner.

One of the major reasons a lot of Nigerian entrepreneurs avoid partnerships is the fear of losing their business or becoming a figure head in a company they started from scratch. A lot of people know the Steve Jobs story and how he got edged out of the company he started and so people tend to guard their companies jealously. In some cases, this limits the success of their businesses.

I often tell entrepreneurs I come in contact with that it is better to own 10% of something that’s working, than a 100% of something that’s not working.

Partnerships help to facilitate business growth; I encourage people to go into partnerships particularly when the said partner can enhance their business growth by bringing vital skills, connections, network or financial resources to the table. Business partnerships work best when each partner isn’t just interested in the profits but also committed to understanding the vision of the business.

“There is a difference between interest and commitment. When you’re interested in something, you do it only when it’s convenient. When you’re committed to something, you accept no excuses, only results.”

The first thing you need to do before going into any partnership, is to ask a solicitor to draw up a tailored agreement about how the business will run and what will happen in certain eventualities, compensation, exit clauses, roles and responsibilities of each partner etc. This agreement should also include a clear distribution of the shares in the company, what each partner is required to invest, and how and when partners will be paid.

One reason business partnerships often end badly is because people go into partnerships based on oral conversation/agreements, emails or even previous relationships without a solid agreement defining the partnership. Never be too enthusiastic to go into a partnership without a formal agreement/contract even if you have a close personal relationship with your proposed business partner.

It is easy to get pressured by the enormous tasks that come with running a business and find relief in having someone to share the responsibilities and risks of the business with.             However, without putting precautions in place, you may discover you were never really on the same page with your business partner.

I have been in business partnerships before and I’m still in one. I remember sometime ago, I got into a business partnership with an old friend, no agreement was signed because the partnership was established as an extension of our friendship. One day, we were having a meeting and he said to me “you can’t do this when you are working for me” Then I replied, “I am not working for you this is a partnership”! As soon as I said that, it dawned on me that I hadn’t signed any agreement or contract providing evidence that I was indeed his partner and not his employee.

Don’t ever go into any business partnership without a well-defined agreement, even if the business partner is your blood relative or your spouse.

Secondly, there needs to be some ground rules stemming from the legal agreement. Let it be clear, who is responsible for what aspect of the business and who has the final approval/word in certain areas.

Partners can clash over a countless number of things, these may range from; conflicting work ethics and financial goals to each person’s role in the business and leadership style. Clearly assign roles to each partner based on their skills and competencies. It may be necessary to appoint one partner as the formal head of the company and even in the case where the both partners are Co-CEOs/Co-Founders there should be a single individual who steers the affairs of the company/partnership and whose decision(s) is final. This will eliminate power tussles.

Finally, get to know your potential partner and learn about his or her personal and professional values, ideas and goals and respect them.

Effective communication is very instrumental to the success of a business partnership. You must each be able to connect and feel comfortable expressing your opinions, ideas and expectations.

To achieve the ultimate goal, you must work as a team by accepting each other’s feedback and input in making the business better.

All the best with your Business Partnership.

Remember SME100Nigeria is here to help you and support you.

If you need help putting together a partnership structure/agreement for your business, call us today to Book an appointment with one of our consultants on 08177743650 or email us on [email protected].

We will be glad to hear from you.

Continue to #askcharles. Send your questions on entrepreneurship and business management to [email protected]

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Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija