A business partnership venture and a deep sea fishing expedition have the same lifesaving rules in common. Before anyone puts a single foot in the boat to head out for the unknown, it’s absolutely critical for everyone involved to know what’s expected of each other when they’re out there. Anything less is courting disaster.
A partnership is considered the most favored business arrangement in the United States (more than 75 percent of all businesses are formed in this manner); it is also historically the most fragile of all ventures. Statistics are foreboding: three out of every four start-ups will fail. While multiple reasons for failure may be cited, the cornerstone of failure can usually be distilled down to misunderstandings resulting from miscommunication. For the structure of a partnership to remain strong, its “walls" must be absolutely transparent on all levels. The following formula can be the recipe for success if it is executed from inception through growth and beyond.
Transparency doesn’t just happenit is an art, and it must be cultivated. First and foremost, the artists must become transparent to themselves. Effective communication begins with understanding one’s own dream for success and being able to structure and explain it to a business partner. Start by writing the vision down, and give as much detail as possible on the following points:
What is the company ultimately trying to achieve?
Identifying the end objective(s) and vision of the ideal achievement is the number one priority. Write structured, coherent statements. Unless the partner is a telepathic clone, never assume that another individual shares thoughts, values or organizational vision.
What objectives are the stepping stones to this success?
Identify the primary immediate objectivesfor each business partner. Identify wants vs. needs for this success to happen, and what those steps actually are. Consider:
1. How will this venture start?
2. How large will it become and when?
3. How long will it reasonably take to grow it?
4. What are the short- and long-term financial goals, and how should these be achieved?
What are the core values and timeframe expectations for this partnership?
Here is where the rubber meets the road. Dollars spent must make sense. How will the company balance the bottom line and maintain the quality and core partnership values that will brand the business (or product)? And if it is ultimately forced to reinvent the wheel where the product or service is concerned, what is an acceptable timeframe for achieving this? What standard does it expect its partner to bring to work regarding these values and accountability?
It is time to drill down and strip away the veneer of the (potential) partnership. Think hard and be honestwhat kind of a partner does a company really want in the seat next to it with his hands on the company’s steering wheel? And in another breath, who would a company want at the other end of the rope if it needed a life preserver?
Identify the personal qualities, qualifications, experience and resources an ideal partner must bring to the table in order to add value to this venture. Clearly, the company needs something from the partnersomething it couldn’t do or do as well without the unionor it wouldn’t be interested in forming a partnership. The ideal partner will increase the size and scope of a brand’s vision, assist in taking advantage of existing opportunities or help create new ones. Conversely, the wrong partner, especially in the case of small businesses, can be the death of it.
Kicking it up a Notch
Whether the above exercise takes as little as 12 hours or as long as 12 months to commit to paper is irrelevant. Now that you have done so, ask one final questionis the contract structured and clearly organized enough for someone who knows nothing about the vision to understand each key point? If “yes," it’s time to interview prospective candidates.
A partnership has been defined in many ways throughout history. A textbook definition of “Partnership 101" can be found in the Revised Uniform Partnership act of 1994. Revisiting the subject of what a partnership is all about may seem like an unnecessary, elementary exercise to those reading this article. However, it is absolutely prudent to remember that the key words in that definition are “trust" and “confidence". This is the strategy for success. A good partner expects transparency to achieve these objectives.
Show and Tell Time
Sharing every aspect of a brand’s vision with its (prospective) partner(s) levels the playing field. Don’t expect that anyone can “smell it"clear communication of the expectations and ultimate goals is the next critical step for transparency to be effective.
Transparency Reveals Either a Perfect Union or a Perfect Divorce
Now that you’ve opened every aspect of the business vision to a partner(s), it's the partner’s turn to be transparent.
Does that individual share its business goals and objectives? What about its vision for company values and standards for product or service quality? This, as it turns out, is the one area serious disagreements and conflicts can arise. Not everyone will hold to the same standards. Listen to the answers a (potential) partner gives, and if they are short, draw them out with further questions that evoke value decisions as a part of the response. If there is a “rub" here, don’t ignore it. Quality and service will be the backbone of a bran’s existence, and it cannot afford to compromise.
It is absolutely essential that a company and its prospect are in perfect harmony with one another. When this is the case, potential for growth is off on good footing. Be sure to finalize everything in writing before you wrap-up, and revisit this strategy at least annually, if not more often. Remember, a glass wall needs frequent “cleaning" to keep it clear.
Conversely, if that partner’s verbiage seems to have begun on a harmonizing note, and is now sounding a bit in discordespecially on make-or-break pointsacknowledge that this (potential) partner is (even inadvertently) being transparent about the limits to which they are willing to fit into the company’s vision. In that case, take off the rose-colored glasses and move on. It is time to make a decision to split the union (if one already exists), or move on to find a different partner.
Transparency: One More Round for Experience
Transparency in a partnership that is the lifeblood of any business success. Full transparency requires a commitment in both time and honesty from all parties. Most business struggles result from obscured or opaque glass walls between decision makers. It is extremely important to spend at least as much time developing a partnership transparency as you intend to spend on perfecting your product or services. The ultimate success of a business depends upon both.
For more information on forming trustworthy partnerships, visit INSIDER’s Contract Manufacturing Content Library.
Jeff Golini, Ph.D., is the CEO and executive scientist of All American® Pharmaceutical & Natural Foods Corporation in Billings, Montana.