The Essential Partnerships TOOLBOX is a system for planning your partnership venture so that you and your partners are on the same page right from the start. It is a system to reduce risks through diligent planning up front. It is a guide to help you consider what’s involved and put a plan to paper to refer back to. The Toolbox features 6 key areas to help with your Partnership.
Business looked good. So good that Jason saw the opportunity to enlist a business partner for his growing fencing business. Craig had complementary trade skills and some business skills that would be useful for the partnership. The market looked good, so they just got on with the job. For the first eight months, things ran well. Jason and Craig slipped into an easy partnership arrangement. Then along came some unforeseen spanners in the works. The first major contract didn’t create as much work as expected. A large supplier came to town, along with the ability to supply materials cheaper than they could. The business was strong in crafts skills but lacking in business planning. Both were busy in the job and there was little time and skills to focus on the business administration. Help was needed to keep up with the BAS and to set up and manage systems.
The partners engaged a friend to advise and assist on business matters. They did not get the right advice and support to maintain and build the business. On hindsight, they should have focussed on skills rather than relationships in this important appointment.
Jason and Craig continued for eight years, meeting hurdles as they came along. They stayed in the business because it suited their lifestyle.
In the end, reading the tide flowing against similar businesses in the area, they decided to end the partnership. They had incurred debt, some of which they were not aware of until it was too late. This scenario is all too common in business partnerships.
Had they had access to expertise before they entered into the partnership, they would have considered a third business partner with the essential missing skills sets. They would have needed guidance to focus on skills and not automatically accept a partner on the strength of friendship. They may not have been able to predict the impact of a large business entry into the arena so soon after they started (i.e. before they became established), but they would have considered a business plan that could be reviewed periodically to track their performance against realistic expectations.
Recommendations for anybody setting up a partnership:
- Go see a solicitor, accountant, and insurance company – all those things associated with a business. It’s worth the money for peace of mind.
- Make sure you have access to the right skills. Consider partners with complementary skills that add value to the business.
- Keep family out of it. Do not bring family business to work. Leave family at the door and do not let family encroach on day-to-day operations. Ensure the family is aware of the established boundaries. Reality is it is a ‘Win – Win’ situation for all. Keep in mind you may be operating machinery etc. and the Safety and wellbeing of your team is your highest priority. One phone call or text can throw concentration which can lead to fatal consequences.
- Consider as part of your Safe Work practises a mobile phone policy. With Facebook, twitter etc. many businesses now ban phones from the workplace and only those authorised can carry and use them.
- Keep your health. Maintain a work-life balance. Do not take work home with you, remember the boundaries established about family – business contact. Double standards will not be accepted.
If you don’t it will lead to mental and physical burn out, thus making it even more difficult to make sound business decisions.
The Partnership Toolbox
The Partnerships Toolbox includes processes to explore the marketplace and opportunities for the partnership. It supports potential partners to build and align a business case to their priorities, as well as develop a plan for how the partnership will work. Add to this a plan for risk management and for checking your business success. Putting pen to paper (or PC) helps to eliminate assumptions and makes you think seriously about the boundaries of your partnership.
If you are ready to take your partnership venture to the next level, contact us now to book in a free consult where we will discuss your needs.
A partnership venture starts out as a brilliant idea between at least two entities. Maybe the catalyst is a friendship that you are proposing to extend into business. You agree it’s a good idea, you sign the agreement, get started and things may be great for a while. Then the cracks start to show.
The financial costs of not planning your partnership venture properly before you get to the agreement can easily get amplified by the costs of damage to friendships and loss of reputation.
For some time now, we have been talking to people who’ve experienced failed partnership ventures. There were too many similarities and a few shocks. Based on these conversations, we’ve put together a list of 18 possible reasons why a stated 80% of partnerships fail within the first 2-3 years.
1 Too many chefs in the kitchen.
When getting together partners gravitate to others with similar skills. Tradies with similar backgrounds working together are a good example. They may have different technical skills which formed the basis of their partnership, but what they possibly needed was a partner with business acumen. Bringing together technical skills for growing market presence may seem attractive, but there isn’t enough diversity to value-add to existing skills and experience.
2 Different (and conflicting)
values. In hindsight, conflicting values shows up as a contributing factor to partnership failure. A partner with a strong family values set will eventually come into conflict with a partner that puts the business first. Which is it to be – 80 hours a week workload to get the venture making lots of money, or a business structured around family time? These differences may not be touched upon at the start, but will quickly become a sticking point and possible deal breaker.
3 At least one partner is a control freak and treats others as staff.
The need to control is a common trait of business owners. Most business owners have it. So why do they forget about this when they get together? At first, partners may try to compromise and make collegiate decisions. But for various reasons, at least one partner will break the silence and move front and centre. There are several ways they take control. They may feel they need to take control so that things get done. Their ego may lead them to showing their control in front of clients. If there isn’t a clear delineation of roles and responsibilities, then partners may extend their control over the other partners and, in turn, confuse the staff.
4 Imbalance of effort.
This is where one partner alleges to be putting in more time and energy than the other(s), which may be the case, agreed or not. Much of this is down to the perceived value of the partnership venture and the time and resources available. A good exploration of the value of the partnership, the return on investment, commitment and resource requirements at the start, will inform an agreement that clearly sets out to identify the effort required of each partner to make the venture work. Any conflict of these arrangements should also be dealt with via the terms of the agreement.
5 Partners are not being transparent, especially when it comes to the money.
This is an all too common partnership breaker. One entrepreneur stated, after three acrimonious partnership failures, that his biggest learning was that “whoever controls the money, holds the power”. Whilst this statement is open to debate, his viewpoint represents the partners who’ve been on the receiving end of lack of transparency from their colleagues. All too often, we hear about partners who syphon off funds and leave the remaining partner(s) with significant debts.
6 Partners bringing hidden debts to the partnership venture.
You probably wouldn’t think it were possible, but we came across two partnerships where partners had attempted to bring hidden debt to the arrangement. One was spotted before the arrangement could proceed. The other wasn’t and the innocent partners found themselves left with the debt. We cannot be too careful when it comes to risk.
7 Hidden agendas.
It’s ok to enter into a partnership with an agenda. That’s a benefit. However, things turn sour when it becomes evident later on, that there are other, less than altruistic, reasons for entering into the partnership venture. Be clear up front. Agendas discovered later on will inevitably lead to mistrust and partnership breakdown.
8 Lack of communication.
When communication breaks down, at least there is some recourse to figure out what went wrong, but a lack of communication is a symptom of a lack of planning – who does what, reporting and accountability. Even with planning, a partner can take a lead role and not keep in regular communication with partners, staff and other stakeholders. Many instances of dissatisfaction and mistrust find their roots in lack of defining and following a good communication plan.
9 Too much, too fast.
A partnership venture that moves too quickly without inclusion of internal stakeholders is heading for trouble. Without a good plan, change gets bogged down in resistance compounded by fear. It takes time to integrate systems and resources. Moving too quickly without good reason slows down the process. A strategy that incorporates change enablers and a change management plan is more likely to succeed.
10 A job versus a business?
Partners, especially when it’s a two-person partnership may be approaching the venture from different mindsets. One partner may be reliant on carrying out the next commission or contract, whilst the other is thinking big picture and building the customer base. Whilst this could be a good combination, each partner must recognise the value the other brings to the venture and take into consideration when dividing the profits.
11 No agreement in place, or missing elements in the agreement.
There are many levels of partnership, not just a formal business partnership. There may be strategic alliances, project-based partnerships and joint ventures. Some will start on trust without an agreement, others will require an agreement in law. When the problems start, the first logical place to look is the agreement. Without the signed agreement, things can go unresolved and may require legal intervention.
12 Management and priorities change – the partnership venture becomes irrelevant.
This is particularly true with strategic alliances. For many, the original negotiation would have taken place at a middle management level. The concept may have aligned with strategic priorities at the time, but things change. Policy directions change. Financial positions change. Without ongoing commitment from top, the partnership venture may become irrelevant to partners who will take their interest and priorities elsewhere.
13 Differences of opinion – who wins the argument?
This can also be associated with some of the other reasons why partnerships can fail. If there is a dispute between partners, how do you address the problem? A good dispute resolution clause in the formal agreement should mitigate issues and address the argument, but it’s not always as easy. The argument may be more fundamental than within the boundaries of partnership. It may be personal. How do you continue a partnership when the wounds aren’t healing fast enough?
14 The balance of power changes when family members are drafted in to ‘assist ‘with day-to-day operations.
This is a common factor in partnership breakdown. A partner will suggest a family member to assist with some aspect of the business. This seems a good idea at first. It may be the right move, but in other cases, there is a perceived shift in the balance of the partnership. Problems can arise over the payment to the family member. One partner may find themselves competing with and alienated by, the other partner and their family member around decision-making.
15 There’s no exit clause.
A strong, yet obvious recommendation from people who had previously been burnt by partnerships was to make sure there is an exit clause in the agreement. This clause is one of the most important, yet can be easily missed or glossed over. It defines what happens to intellectual property, profits, debts, clients and other considerations, in the event of, or when, the partnership venture ceases. This is particularly important if partners bring assets to the partnership and wish to retain those assets afterwards.
16 No policies and procedures and/or documented system.
This is also associated with the issue of too much, too fast. The partners will be bringing to the venture their existing ideas on systems and processes which need to be rationalised for the new venture. The venture may lead to staff and additional resources. If there are no policies, procedures or documented systems, as with all businesses, the venture is high risk.
17 Not resolving issues when they first occur.
Examples of failed partnerships are littered with issues that were not addressed as soon as they occurred. These might have occurred between partners that didn’t feel confident about raising issues, especially in the early days. If not resolved, this practice can become toxic to the partnership.
18 Probably didn’t need a partnership in the first place.
What if you enter into a partnership and realise it’s not what you want? Over time you find you’re not comfortable with giving up some of your power. You begin to notice the irritating habits of your partner(s). You prefer to be your own boss and manage your own staff. You find you could have achieved what you set out to achieve another way. For these businesses, some investigative planning at the start of the partnership journey could have saved them from the experience. A partnership was probably not the right option.
Are you or someone you know setting up a partnership venture?
Investing in the Essential Partnership’s Toolbox can help you avoid a disaster that could cost you hundreds of thousands of dollars to rectify and the bitter and heart breaking end of a long-term friendship.
What is there’s was a way you could work out whether you are compatible with similar expectations?
They say the devil is in the details – how would you like to work through details of everyday operations and not assume the other partner has the same ideas. What if you could work your way through risks, manage change and agree details up front on how to manage conflict.
If you are ready to take your partnership venture to the next level, contact us now to book in a free consult where we will discuss your needs.
You don’t have to go far to hear about business partnership ventures that went wrong. Some people have lost hundreds of thousands of dollars; they have lost friendships, families, their homes and their livelihoods. Don’t let this happen to you!
If only there was a way to check that you and your prospective partner/s are on the same page and how you will work together right from the start?
Partnership ventures start out with the best of intentions, but there are so many things that can go wrong that are amplified when two or more businesses or partners have a stake in the venture, Download our article “18 reasons why 50% of business partnership ventures fail within the first 2-3 years” . These were based on feedback from business owners who had been burned by partnerships gone wrong – we could have easily added more.
Partnerships and collaborations and their dynamics have fascinated me for a long time. Over the years, I have developed resources that have been used in a variety of partnership planning scenarios.
I was introduced to the world of partnerships and collaborations through an international academic partnership for a two-year project that did not go as planned. The project was a success but for the lead partner, the objectives and outcomes were not as expected. Evidently not all partners were on the same page at the start. Diverse organisational cultures and different understandings of the scope and objectives of the venture impacted on the journey and the outcomes. This was not a unique experience. I have observed the same pattern over and over again.
I was later employed by a partnership of organisations that set up a company; a partnership which although it had its challenges at the start, is now still in existence many years later. It was an interesting time navigating through the dynamics of ten diverse partners going through the teething problems of an early stage venture. At time, it felt like the whole venture could implode but with tenacity we pulled through.
For the last 16 years, I have been working with partnerships and collaborations of all kinds, assisting through processes to joint venture or develop strategic alliances; with varying levels of success and in some cases, failure. I have learnt to spot potential problems right from the start, able to identify flash points, in some cases, within the first meeting or conversation.
More recently I have spoken to business owners who’ve been involved in partnerships at some stage of their business careers. It was alarming how many had gone into their partnership ventures without any real planning. They assumed that everybody was on the same page, but reality proved otherwise. It’s not surprising how many partnership ventures fail.
I developed this toolbox to help you build your business case for a partnership or collaborative venture and address potential risks before you put ink to paper. If you are already in a partnership that isn’t going the way you expected, this toolbox may help you identify why.
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9 steps to planning your business partnership
* this resource is not intended to give legal advice. We leave that to your legal teams.
This toolbox is available as a stand-alone resource or as part of a package of support so that all partners benefit from being equally able to contribute to the partnership planning process. As outside facilitators, our aim is to assist you in planning how your partnership venture will work.
Craig and Jason – Their Story
Business looked good. So good that Jason saw the opportunity to enlist a business partner for his growing fencing business. Craig had complementary trade skills and some business skills that would be useful for the partnership. The market looked good, so they just got on with the job. For the first eight months, things ran well. Jason and Craig slipped into an easy partnership arrangement. Then along came some unforeseen spanners in the works. The first major contract didn’t create as much work as expected. A large supplier came to town, along with the ability to supply materials cheaper than they could.
9 tips for a successful partnership
1 Complementing skill sets – ensure you have a mix of diverse and complementing skills
2.Similar values and vision – a strong vision creates direction and strength to get through the tough times. Many partnership breakdowns can be traced to different values sets. Sharing similar values is imperative.
3 Balance effort -be clear about the time, resources and effort you are prepared to put into the partnership from the start to avoid resentment later on.
4 Transparency – openness and honesty is critical. Don’t be on the receiving end of hidden agendas – foster transparency from the start.
5 Communicate – a lack of communication is a symptom of lack of joint planning – who does what, reporting and accountability. Create a formal communication process to keep your partners informed (vice versa)
6 Don’t move faster than you can manage – avoid resistance with a change management plan that accommodates each partner business
7 Have dispute and exit plans in place – for peace of mind, consider your assets in the event of the partnership ceasing and ensure there is also a dispute resolution clause in the agreement
8 Evolve – keep the partnership moving with the times to stay relevant in the marketplace
9 Do you really need a partner? – Whilst a partnership could be mutually beneficial and greater than the sum of the parts, there may be alternative options more suited to your goals.
The full article is available at http://blog.bartercard.com.au/9-tips-for-a-successful-partnership
So you are planning to work with others for a joint venture. Or you maybe considering working more closely to share resources and services. Everything seems fine at the start, but things can get complicated very quickly and you may end up disappointed or worse still, be left tens of thousands of dollars out of pocket and a damaged reputation.
Here are nine steps that you should follow improve the chances of a successful partnership venture:
- Never enter a partnership arrangement without being clear as to the need:
a. For the venture or project
b. For a partnership
If there is not a strong need, it could be difficult to get buy-in from partners.
Each partner must be able to see the benefit for their own business and must be clear on their roles and responsibilities as well as investment in time, finances and resources. Overall, the project must be of mutual benefit to all partners.
2) Engage with partners who are committed to the partnership, that you can trust (there are different levels of trust required for different levels of partnerships), that relate to your values and philosophy, and understand your culture.
An absence of any one of these could adversely impact on the foundations of your partnership.
3) Be mindful of agendas and ensure that the partnership venture has a common vision, clear objectives and expected outcomes which reduce the risk of the activity being deviated to meet the needs of one partner. The vision and objectives should be supported by strategic directions and priorities, and should be visited on a regular basis to ensure that the venture stays on track.
4) Ensure that the owners or boards of the partners are fully supportive of the partnership venture. This will involve submitting a business case and business plan to be monitored at the top level. In some ventures, there may be a governance group with oversight of the partnership. This will ensure that the partnership venture remains supported, especially when it is endorsed by an Agreement/Memorandum of Understanding signed by all partners at the start of the project or collaboration.
5) Be clear as to the level of partnership you are engaged in -networking, cooperating, coordinating, collaboration or integration. Each level requires different levels of engagement and trust as well as impacts on the operations and governance of each organisation.
7) If your partnership involves change, make sure you have a change management plan in place that is supported at the senior management level, has a clear communication structure, encourages people to get involved, can be evaluated, recognises successes, keeps things flowing along and builds in the celebration of achievements. Engage change enablers such as access to expertise, time, funds, IT/communication platforms, systems and organisational policies and procedures. Short term performance management plans encourage employees and volunteers to carry out small, manageable, projects to assist with the change project.
8) Manage risks before they manage you. Prepare, implement and monitor a risk management plan to reduce the impacts of changes to partners, commitment and activities, as well as to address potential conflict.
9) Benchmark the need for the partnership and evaluate the partnership to give you the skills to do things even better next time.
And finally… never lose sight of the need. Never lose sight of the vision and objectives and never forget that you are not the only person or business/organisation involved in the partnership – be flexible, play your part, consider others and plan the partnership to be inclusive and to succeed.
How many times have you heard of partnerships that didn’t go as planned? Partnerships that started with a lot of enthusiasm, a brilliant idea, and plenty of positive energy and goodwill, which turned sour to the point that the goodwill left the partnership a long time before the end. What if you had the tools to examine the potential partnership right at the start? Tools that would come in useful to avoid misunderstandings later? Which could help you to determine whether you are a good fit?
The Community Entrepreneur has developed the Essential Partnerships Toolbox designed to help you analyse the need for the partnership, determine whether you are a fit, build a robust business case, minimise risks and prepare for change. This isn’t the legal document; we leave that to the lawyers. This toolbox gives you the tools to plan your partnership. Be amongst the first to take advantage of this toolbox. Contact Pat or Karen at The Community Entrepreneur – 03 9005 5889 (firstname.lastname@example.org).
If you are ready to take your partnership venture to the next level, contact us now to book in a free consult where we will discuss your needs.
Welcome to The Essential Partnerships TOOLBOX – How to set up a Business Partnership Venture for Success
Five Foundations of Successful Partnerships
3. Compatible Values
4. Common Philosophy
Commitment Commitment must come from the top. Instigators of operational partnerships may be people working in the business as middle level employees. They have identified a need – to them it all makes common sense. However, this may not fit with the vision of the business. The Board or CEO may not understand the perceived opportunity or urgency, or may wish the business to go it alone, independent of interference from another business. Without commitment at the highest level, the partnership venture will not succeed. What is the expected level of commitment:
Partner A _________________________________________________________________________
Partner B _________________________________________________________________________
Trust Trust is a currency that is difficult to measure, but without it, the value of any partnership venture is zero or negative.
Trust may come with reservations and be fragile, but at least there is a level of trust. When trust breaks down, the situation can become intolerable to the point that it may prove to be impossible to retrieve the situation. It takes just one partner to break the trust. People may have unreal expectations when entering into a partnership venture. Trust may also break down due to misunderstandings. The Framing your Agreement module should help to balance out those expectations and avoid misunderstandings.
Trust is about believing in the reliability of the partners to commit to and work together to achieve the aims and objectives of the partnership. The breakdown of trust may mean that somebody doesn’t believe that any or all of the others will do their bit or that they may believe that there’s a conflict of interest with one of the partners who could be using the partnership to achieve their own agenda. The discovery of hidden agendas is a major contributor to the breakdown of trust.
Partners who don’t have enough knowledge of each other should ensure that they build trust into the Partnership Agreement process.
Not enough attention is paid to personal and organisational values when putting together a partnership venture, yet this may be a significant factor for partnerships breaking down. Knowing more about each other’s values should assist in developing a good fit.
A business that values employee or client engagement may have difficulties in understanding an organisation that values the financial bottom line. What if your business has a reputation for being entrepreneurial and your partner is risk averse?
You are not required to have the same values, but you should have values that connect at some level.
What are your organisation/business values (for examples – see Values Checklist
How do they relate to your business partner(s) values?_____________________________________
What are potential issues?
Every organisation has a philosophy. Philosophy acts as the guiding principle for organisational behaviour. It represents the core beliefs, values and principles of the organisation. If one business has the philosophy that everybody is capable of achieving greatness, but another believes that people are widgets, then there’s potential for a clash.
Culture Recognising and understanding organisational culture is an issue as even within the same industry, organisational culture will be different from business to business. All businesses have a culture – the way we do things around here.
Culture can be a blocker when it comes to partnership activities that have the potential to lead to change (or at the extreme, a merger). How do you come up with one set of procedures when each partner has their own way of doing things? An outwardly engaging partner may have a poor workforce ethic operating in the background. They may even been looking for the partnership to address some of their internal conflicts. Culture can be difficult to articulate and the differences may not come to light until well into the partnership venture.
How solid are your partnership foundations? Occasionally review the Collaborative Partnerships Checklist (listed below) to identify the cracks before they become chasms. Up next…. what kind of partnership venture are you involved in? Check out the Levels of Partnership
|Collaborative Partnerships||Foundations of Collaborative Partnerships||Values Checklist|
The Essential Partnerships TOOLBOX is a system that can be tailored to suit your situation. It includes a structure, templates and checklists to get started straight away with your prospective partners to develop a business case and plan. If you have resources (human or otherwise), the system includes a change management process for you to adapt to your needs. The system includes an option to upgrade to our premium packages to assist you with developing your business case or change management plans.
In today’s global society, partnerships exist across borders. This toolbox is universal which means it is useful no matter where in the world you are planning your prospective partnerships.
The Facilitated Package offers support customised to your requirements (including face-to-face) – contact us to discuss your requirements. Additional options also available may Include independent legal and financial support.