Just a glance at the modern economy tells you that partnerships are essential. Companies rely on each other to get results, whether it’s a large enterprise buying consulting services or a small business looking for a marketing partner. It all matters enormously.
Choosing the right partnership, though, is challenging. Just as when you pick a spouse, you have to navigate the complexities of the relationship, bobbing and weaving with the other's needs while keeping an eye on your objectives.
However, there is some good news: emotions do not tend to run so high in business partnerships. You’re not going to get into screaming matches with colleagues from other businesses if things go wrong as you might in marriage. Even so, you need to approach the project purposefully. Going into it on a hope and a prayer is a recipe for disaster.
So what should you be doing to make sure that your business partnerships work? Here we explore some ideas.
Be Explicit In Your Roles
You don’t ever want to find yourself in a position where one business partner isn’t clear about the other's responsibilities. That sort of thing can lead to both parties feeling disgruntled about the situation and “overworked.”
If your business relies on outsourcing services to third parties, the agreement should clearly state what is and is not a part of the service. For instance, an accountant might file your accounts when you send them the details. But they can’t be held responsible for errors on your receipts. It should be clear that that’s your responsibility.
Consultant relationships need to be even more defined. Both parties need to establish whether the services are passive or active. Some consultants, for instance, only provide advice. They don’t actually do the work. By contrast, others do assume the authority to make substantive changes in your business that are in your interest. In the latter case, you need to thrash out the precise form that assistance takes and how far it goes. It could be something as simple as installing a new app or as complicated as managing complex projects through time. You must define roles to avoid confusion and resentment.
Pick Up The Phone And Talk
Communication breakdown is a risk in business partnerships - just as it is in personal relationships. Smart entrepreneurs always find reasons - formal or not - to communicate with their partners, find out where they stand and what’s coming down the pike. This approach helps to eliminate nasty surprises and ensure that everyone is playing ball.
Write Down Your Agreements
Depending on the sector you inhabit, you’ll need to write down your agreements in formal language, perhaps with the oversight of a legal professional.
If the agreement is operational, just writing it down will help all parties define their values, mission, and objectives. There’s no reason to go into partnerships based on verbal agreements alone. Everyone appreciates having a document they can refer to in the event of a conflict.
Rely On Their Expertise
Your goal should always be to learn more from your partnership, whether it is a direct relationship with somebody else inside your business or an enterprise you’re outsourcing tasks to. For instance, traveling physicians often don’t have the laboratory facilities to carry out bloodwork for the patients. They need to work with a partner who provides these services and can provide a rapid turnaround. The challenge for the medic in this situation is to defer to the expertise of others.
Running a successful B2B business is all about getting comfortable with delegation. If you’re in a partnership, that’s precisely what you need to do. Micromanaging every last aspect of their operations will just create tension and undermine the original purpose of the arrangement.
When You Make Mistakes, Admit It
Sometimes one member of the partnership will make a mistake that has knock-on effects on the success of the other.
Please note - some mistakes are very serious, but there’s no point covering them up. Eventually, the truth will come out, and you’ll have to correct the damage done via some mechanism.
The trick here is to admit what’s gone wrong quickly to reduce the damage and the blame you face. Everyone in business makes mistakes. It’s part of being a leader and an entrepreneur. But when you’re in a partnership, you have to acknowledge the error and move on.
Discuss Your Long-Term Plans
Companies find themselves entering into partnerships all the time, only to find that the other party had a different time horizon. For instance, your B2B business might expect a relationship with a supplier to last ten years. However, the vendor might have other plans and want to pivot to an entirely new business model in just twelve months. In this case, your partnership is at odds with theirs.
You can also have issues when the strategic objectives of the parties conflict. For instance, the company that currently sells inputs to you might also want to integrate vertically. Eventually, they could become a competitor, creating an apparent conflict of interest. Again, that’s not something you want.
Be clear about your long-term goals and ask them to be too. Find out whether you're able to achieve them by working together or not. Look for potential conflicts several years down the road.
Be Open About Your Strengths And Weaknesses
When software companies partner with other businesses, they usually spell out in clear terms what they can and can’t do. This conversation is different from your service level agreement. Instead, you’re speaking in frank terms about what your business can reasonably achieve and then comparing that to what the other party expects.
If, for instance, you’re a marketing agency but don’t have content writers on your team, then they need to be aware of that. Perhaps you’ll have to subcontract that task out to a second agency and so on.
Similarly, if you're looking to work with an agency that will provide you with services, then you also need to be clear on their strengths and weaknesses.