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The Wrong Business Partner Can Create Lifetime Pain

People select a business partner for a variety of reasons. It may be that one partner brings the required financing or a degree of expertise the other does not have or a group of individuals tackle a new business initiative together.

Regardless of your reason for seeking and selecting a business partner its important to be on the lookout for the right mix. The care business – the task of serving humans – is different! You need someone you can work well with and who shares your ideals so here are a few types you may want to avoid.

The Money Grubber

Some individuals, including those who enter the care business – assisted living, home health care, visiting physician practices – are not people centered at all. Their vision does not extend beyond the receivables and they have little to no concern over the delicate, emotional issues affecting those they serve. They take little time to encourage, uplift, inspire or dignify others.

So if you are people centered and among those who have the maturity to balance the financial with humanitarianism then you want a business partner with the same ideals.

The Envious

Remember the difference between the jealous person and the envious person. The jealous person may resent your advantages, perceived or real. The envious person resents them and wants to strip you of them. This is an incredibly dangerous personality type.

This is the person who after a few weeks of operation is suspicious, for no good reason, about what compensation you may be taking from the business. They do not inquire, they accuse. If you have other sources of income they want to know what they are and how much money they represent.

They are often prisoners of their own insecurities and have the spirituality of Judas Iscariot himself. You will want to watch for this type of person who wants to be your business partner.

The Power Nut

This is the person who regardless of what duties are assigned to them – which they accept – prefer to demonstrate the authority they feel being a business owner should bring. Maybe they want to boss employees who do not directly report to them or they undermine certain decisions made by the partner who has the authority to make them.

If this person does not respond to reason, confusion will settle in and the progress of the business will be compromised.

The Perpetually Ignorant

Everyone who enters into a particular business model is not always super literate in everything that business involves. This is why we have consultants all over the place. However, if you enter into a business model which is new to you it is up to this new partner to investigate the regulatory and operational apparatus affecting that business type.

Some clearly do not invest the time into learning all that the business model involves.

They do not use the internet or available resources from the state of operation. They ask questions months into the partnership they should have known well by now. Some even use ignorance as a basis for feeding both insecurity and fears they create.

Learn how curious a prospective business partner is to learn the business model and not just sit around hoping they can collect a new income. If you discern they are not sufficiently curious this might not be the partner you need.

The Weak Minded

How often have you talked to the person who has all the answers their friend told them were true about your business plan and the information they pass along is as far from reality as you could have ever imagined. It happens everyday.

Some cousin, friend from across the world, etc. who needs to prove they have this person’s best interests at heart feeds them all of this garbage and you have to come back and clean it up. Problem is it is already fact in this person’s mind and their being weak minded will only bring you further grief. Its time to rethink this business union. You need clear, comprehensive, analytical thinkers, not followers or the work environment will sour often.

How to Choose a Business Partner

Many people think it’s a bad idea to go into business with a partner because you have to split the ownership and profits. However, having a business partner can actually increase your profits and overall business success. Many of the most successful companies were based on a partnership: Ben Cohen and Jerry Greenfield- Ben & Jerry’s ice-cream, Larry Page and Sergey Brin- Google, Jerry Yang and David Filo- Yahoo, Dr. Katie Rodan and Dr. Kathy Fields- Proactiv Solutions. Having a business partner can substantially increase the overall success of your business, because a partner can offer their own connections, expertise, and skills the business needs in becoming successful.

1. Look for a partner who shares your passion, vision and excitement: You want to choose a partner who shares your vision, believes in what you are trying to accomplish, and is as excited about the idea as you are. You have to understand this is the person you will be spending and living a lot time together with. In developing the business you and your partner are bound to face many stressful challenges as well as successes. You need a partner that is tolerant as well as positive during both the good and the bad times, and will not leave when things become challenging, but will rather stand up to the challenge and be in it for the long haul. Therefore, allowing the business to grow by achieving the short-term and long-term goals of the business.

2. Choose a partner that is complementary: It may be tempting to choose someone who is just like you, but this will not make a business successful, as you want someone who can bring different skills, experience and know how. No person is a master of all things, if you are skilled in finances you may want to choose a partner who is skilled in sales and marketing. The combining of different skills allows for greater innovation, more ideas, better planning and a greater chance that your business will be successful. As the popular saying states: “Two minds are greater than one.”

3. Find a Partner who shares your values and practices good business ethics: You only want to go into business with someone you can trust, someone who values honestly and full disclosure. Choosing an unethical and dishonest business partner will destroy the business. You need someone who will respect the businesses ideas, its assets and the laws of business, as you do not want to get into trouble. It is wise to conduct a thorough investigation of the partner you are considering, look into their previous business history, check their references and do a background check, which can include a police clearance, this will show if they have any previous criminal violations.

4. Find a partner that can offer the business resources: Financial resources is only one of the resources a partner can offer, there are many other valuable resources a partner can offer which can greatly improve the chances for business success, for example:

• Connections within the business industry such as vendors, distributors, recruiters, investors or suppliers.
• A strong client list that can lead to potential sales from business owners, specialists, or media contacts.
• Credentials and business expertise.

5. Define and allocate responsibilities: In creating a partnership it is important to assign roles and responsibilities for each partner, whether that is VP of engineering, marketing and sales or operations. It is best you do what you know best, and let the partners do what they know best, give each partner the freedom to improvise, as they will perform better when you respect them for knowing what works and what doesn’t.

6. Write a legal partnership Agreement: In choosing a partner you will need a legal agreement, stating the responsibilities, the financial obligations, how expenses and profits are distributed, what are the terms and conditions in the event the partner decides to leave the partnership, and how will the issues of breach of contract or disputes be resolved. There are many partnership agreements online that are free to view and some can be downloaded for free. However, each partnership is different, and it is recommended in forming a partnership you hire an attorney, who will customize the agreement to the specifications of the business and its partnership.

7. Look for a partner that does not come with baggage: A partner, who is consistent, will be able to devote tremendous amounts of energy and commitment to the business. You can not afford to have a partner who has a lot of personal issues or problems, as this will interfere with the ability for the business to grow. Constant excuses, for example I can’t make it because….are not acceptable when the success of a business depends on each partner giving 100%.

Find A Business Partner

Tired of going it alone? Is the burden of making all the decisions, providing all the financing and working continuously more than what you anticipated? Or perhaps you’re missing key elements for your business such as assets, skill sets, products or services that could propel your business to the next level. All these reasons and more are enough to hinder the growth of a would-be successful business; therefore, finding a business partner could be the answer to your predicament. The primary reasons, I believe, one seeks to find a business partner is to maximize profit while minimizing risk and effort. I know you’re probably thinking of the old adage which equates partnerships to marriages and we all know how a lot of marriages turn out. But unlike a marriage, a good partnership is not built on emotions and feelings but sound analytical judgment. If executed correctly, a good partnership will add value to your business.

Partnership or Strategic Alliance

Don’t worry a partnering agreement doesn’t have to be a lifetime commitment. In fact, you can and should create a strategic alliance as a way of testing the viability of the potential partnership before you sign a contractual agreement to form a partnership. A strategic alliance by definition is usually less formal and typically has a specific end date. You can develop a strategic alliance with a business or entrepreneur. It can be for a specific project, task or the obtainment of a particular product or service. Developing a strategic alliance first, will allow you to test the arrangement before determining if something more lasting can be established.

SBA Pilots Small Business Teaming Program

Another form of collaboration is “Teaming”. Teaming agreements are for the express purpose of working on a specific project or bid. It allows small businesses to pool their resources for projects or bids too large for one business to handle. The federal government believes so strongly in this, that the Jobs Act authorizes the Small Business Adminstration (SBA) to “make grants to eligible organizations to provide assistance and guidance to teams of small business concerns seeking to compete for larger procurement contracts.” The SBA Office of Government Contracting is executing this provision by asking qualified organizations (for profit and non profit) to compete for the grant funding. Recipients of awards made under this Announcement will be expected to help small business concerns “find other firms that may be interested in teaming with them, assist small business concerns with the formation and execution of teaming arrangements, aid teams of small business concerns with identifying appropriate larger contracting opportunities, and assist teams of small business concerns with the preparation and submission of bids and offers”.

Tips for Developing a Partnering Alliance

1. Develop a Plan – first, you must determine your company’s value and the value you want from the alliance partner. You can accomplish this by outlining your strengths and weaknesses. Knowing what you bring to the table and what you want from the alliance partner helps you develop a strategy.

2. Identify the Right Partner – once you’ve identified an alliance partner, perform your due diligence to determine if the alliance partner is the right fit. Determine the alliance partner’s:

• Objectives
• Financial Position
• Core Capabilities
• Company Culture
• Tangible and Intangible Assets
• Operations and Processes
• Legal Liabilities (if any)

3. Develop the Agreement – Joint Ventures and partnerships will usually require a more formal contract than a strategic alliance. Consider the following when developing an agreement:

• Legal structure
• Equity interests of each party
• Initial capital and any commitments to future financing
• Voting structure
• Decisions requiring consent of the partners
• Commitments to provide technology
• Non-compete undertakings
• Broad scope of any warranties/indemnities
• Basic exit provisions
• Condition standards
• Target timescales

4. Performance Measurements – develop accountability measures with a timetable for goals and benchmarks.

Whether developing a partnership, joint venture, strategic alliance or teaming, it’s always good to consult with your attorney before signing the agreement.

Finding the Right Business Partner

One of the major challenges facing entrepreneurs and business leaders is finding the right business partners. Great care should be exercised when selecting associates because the right choice can bridge gaps and assist in the execution of your business plan. The wrong choice can harm the reputation and earnings of your company. One should consider the following
when forming strategic alliances:

Find Believers in Your Mission

No one will champion your cause like a true believer in your vision, products, and services. Align yourself with those who comprehend the magnitude of what you are doing and will offer wholehearted support to your endeavors. Those who align themselves with you solely for monetary gain will often carry a short-term perspective that will conflict with your long-term business strategy.

Active Partner vs. Passive Partner

Another consideration is: Are you looking for an active or passive interest holder in your business? Do you seek someone who will be involved in the day-to-day management of the company? Many entrepreneurs opt for passive partners to avoid having them encroach on the management of the business. If you elect active partners, it is important that they share
the same vision, objectives, and ethics as your associates.

Smart Money vs. Silent Money

When pursuing financial partnerships, you have several options. You can choose investors that will solely provide financing, or you can partner with funding sources that will also offer guidance and help in strategic planning. Silent monëy could be the right choice if you have a seasoned management team and desire total creative control. However, if in both cases you will surrender the same amount of equity, it makes more sense to
partner with investors who are well connected and may also offer advisory services.

Complementary Skill Set

Your ideal operations partner will have a complementary skill set. They will strengthen your areas of weakness and allow you to compete effectively. Their affiliation will most importantly shorten, or eliminate altogether, the development time necessary in particular areas. Your resources will not have to be spent acquiring expertise in areas where your partner is already adept.

Alliances

Your ideal partner should also be in a position to help you förm strategic partnerships. This person/organization ought to be able to help you align yourself with people who can assist in growing your business. Strategic partnerships can also bring about needed political affiliations.

Growth and Exit Strategy

A major point of contention for many partners is the company’s growth and exit strategy. Some parties may be content as the owners of a small business, while others seek to franchise or even go public. All parties should be in agreement on how they plan to access the equity of the company, rather it be by salary and dividends, or a substantial liquidity event.

The right partner can ease the road and multiply the profïts of your business. Whether you’re looking for investment funds, advice, a complementary skill set, or helpful associations, choose this relationship wisely.