It is commonly thought that the place to start a joint venture or business partnership is with a business plan. A good business plan is essential but it’s not step 1. Step 1 is to find out as much as possible about your potential partner and allow them to find out about you to make sure you are a good match. Partnerships that work are a blessing on many levels, but most (70%) of them don’t. It’s not that they can’t. It’s just that there are myths and lack of “how to’s” that abound. Even those who do know how to put their attention elsewhere and avoid doing the necessary foundation building to ensure success.
One myth is that a business plan is needed first. It is, of course, a very important element of a successful business to have a business plan, but it’s step 3. Step 1 is to choose the right partner; step 2 is to have a solid written agreement; step 3 is the plan. If step 1 doesn’t happen, then steps 2 and 3 are moot. If step 2 doesn’t then don’t bother with step 3.
Business is about relationships that affect all levels, employees, clients, managers, vendors, neighbors, family members and more. But the main relationship in a business or joint venture partnership that affects all the others and ultimately the success or failure of the business is the relationship between the partners at the helm. So getting back to Step 1, how to go about knowing you are choosing the right partner. It may not be the favored way of thinking about it, but it makes the most sense. Compare it to marriage. You date for a while before deciding you are meant to be together. The same in the world of business.
Here are some of the things to guide your “getting to know you” stage that will lead you to know if there should be a Step 2 Conversation Guide: Start with a willingness to be increasingly transparent as trust and respect grow. If they don’t you will be wise to walk away. Share how you got to this place, your business history, and experience if any with a partner. You will want to know if you share the same values, vision and are on the same mission regarding the products and services you want to offer. You want to know about finances, including your policy about taking risks. What is your financial situation now and how did that come about? What is your family situation and do you have their support regarding this business? This partnership? Do you share the same work ethic and what about ethics in general? Do you and your potential partner(s) have the same reputation and conviction for honesty and good customer service?
How about employees? Teamwork or independence? What are your priorities and long-term goals? Will you be watching and counting who works more hours or are you ok with everyone stepping up when needed no matter the amount of time it takes?
Warning: Sometimes the desire to move ahead with your partnership is so compelling that you choose to ignore red flags and your intuition that is saying “not this one”. It is wise to pay attention and heed the warning. If this happens, shake hands and walk away, congratulating yourselves that you avoided the pain and expense of a failed partnership.
If you’ve chosen well move on to Steps 2 and 3…the partnership agreement (different than the partnership agreement that your lawyer will write later) and now is the time for the business plan.