What Do You Know About Your Business Partner?
Is Your Friend Necessarily a Good Business Partner? – No.
It is exciting to work with friends but the key to sustaining good working partnerships lies more in engaging with the right partners. Life can be wonderful if suitable business partners are also friends, but things get dreary very quickly if your partner friends are not suitable business partners. This has been my experience. Having been overjoyed at the idea of partnering with two friends for a startup fashion boutique, it became clear quite early into the operations of the business that things were just wrong. Before I go into my list of do’s and don’t’s, it may be useful to say a bit about the partnership.
Story of My Partnership in a City Fashion Store
What Do You Know About your Business Partner?
My Story ...
Our fashion boutique which we called City, was located in a busy shopping centre on a busy street just outside the city centre. The area is a premier attraction for tourists, and is therefore in the midst of the hustle and bustle of businesses, vendors, employees, services, all vying for or supported by the tourist dollar. One weekend three of us were staying together at my holiday apartment on the outskirts of the city. We did this quite often – Leon, Verona and myself, friends coming together to laugh and have fun. Over the past several months we had been observing with interest the development taking place in the surrounding business districts, and on this particular evening after shopping and viewing some of these new developments, the idea of opening a fashion boutique was raised. We are all interested in fashion and Leon is the ultimate fashonista, so the idea was quite natural to us.
The story continues....
Over 60 – But Young and Fashionable
The story continues ...
We are all three of us over sixty and think of ourselves as new, fresh, vibrant, young and fashionable. Two of us are tertiary level educated, one at the masters’ level. The third partner, Leon the only male, worked in the fashion industry in Europe for several years. We have all three been involved in business ownership or management but two of us in the service industry (i.e. information technology and finance & insurance). Though on paper this is an interesting blend of knowledge and experience, it proved difficult to exploit, due in part to other shortcomings in the partnership. Early in the process of establishing the business, the financial commitment of one partner seemed to be wavering. He proposed two or three alternatives to his providing the one-third portion of the start-up budget, but though we knew that this was simply creative accounting we decided to go along thinking that he would ‘sort it out’ eventually - you see he is our friend. Soon though we began to suspect that he was not as financially able as had been assumed and so the possibility and practicality of an unequal equity split was discussion with our lawyer – Leon was not included in the discussion, being overseas at the time. Though possible and practical, this arrangement created fundamental fissures in the partnership, relating to trust. Not only had the initial concept of equality shifted, and indeed against the male partner, but also the interactions were soon becoming two plus one discussions rather than open honest discourse. Though this started with Leon seeking often to conspire with one against the other, possibly as a reaction to hurt feelings, it soon became behaviour that we all were engaged in without realizing it.
Trust in Jeopardy ...
As if this were not destructive enough, there were operational problems creating further cracks at the seam of the partnership. It rapidly became evident fact that we were not thorough in vetting each other’s competence and commitment before agreeing to partner. Not only was the trust relationship now in jeopardy, but the skill and experience which underpin competency were showing up to be under-par in some business and operational areas. We took it for granted that because we were friends, each could do what they said they could, and that expressed interest meant commitment. It turned out to be not so. Eventually we closed after about two years.
11 Things to Take Note of in Seeking a Business Partner
Traits and Characteristics Critical to Good Business Partnerships
- Knowledge and experience – do your partners have pertinent knowledge and /or experience. If you are entering the fashion business knowledge of that industry should be critical considered. Management and financial expertise are necessary to any business. Depending on the enterprise, other areas such as customer service, team building, sales and marketing may be pertinent to the selection. For City the considerations were experience in running a fashion boutique, knowledge in the areas of finance and accounting, experience in business management.
- Wit and Intelligence – how well does he or she appreciate humour and is able to laugh at himself or herself. Wit could be an indication of intelligence and maybe confidence.
- Commitment – if partners are not equally committed to the project it won’t be long before some are carrying more of the burden than others. There are always burdens and problems in running a business.
- Interest and enthusiasm – this is a bit like commitment. It is important to remember that persons will express enthusiasm in different ways, some are more bubbly than others but being not bubbly doesn’t necessarily mean lower interest. Though this may be subjective, it is not difficult to discern the interest of the potential partners – do they bring ideas? Are they available for planning meetings? Are they fully engaged in the discussions …etc.
- Genuine likability – I find it important to like the people I work with. If they are partners then it becomes necessary in order for it to be a wholesome relationship.
- Trust – confidence that what is said is meant and what is meant is said.
- Attitude to life – does he always focus on what’s wrong or can he see the positive even in a failed undertaking? Before long you will want to avoid a partner who is always negative. Not only does it irritate but it offers no opportunity to grow and develop.
- Leadership – ability to create change when necessary
- Inquisitive – is the person curious? Is he likely to keep abreast of trends, the competition, the market?
- Technology aware – one does not have to be a technology buff but partners should be able to use basic technology, and be willing to learn the technology that the business uses. In the City experience the partner with responsibility for day to day operations had little basic technology exposure and no propensity to learn the point-of-sale system. Thus problems related to inventory control, sales and collections were only being detected after the fact with serious negative effect on the bottom-line.
- Equivalence in skill, talent or opportunity – the City partnership had one partner having strong skills in management and leadership, another with moderate skills in finance and accounting but little enthusiasm, the third proved to be weak all around. Thus the partnership became weak and the business eventually failed - a chain is only as strong as its weakest link.
I have thought about arranging the list in its order of importance but after several tries I gave up trying. The conclusion is that they are equally significant to creating a healthy and successful business partnership. Good partnerships demand capability of each partner, and mutual regard for each other. It also requires equal commitment to assigned responsibilities.
[Note: names have been changed to protect identity]