Whether you’re trying to get a small business off the ground or encourage growth in a new one, forming a partnership can be an excellent strategy. Wherever there’s a need for varying skills and more investment, there’s usually a partnership which is perfect for the situation. However, that doesn’t mean that all partnerships are inherently good things.
There are many costly mistakes that come entrepreneurs make when it comes to partnerships. Here are some to be aware of.
One of the worst mistakes you can possibly make is rushing into a partnership without considering your long-term goals. This is especially prevalent when it comes to partnerships between two smaller start-ups.
At the start of any business venture, it’s pretty common for business owners to be very optimistic about the future, and think that their chances of success are fairly high.
This can often lead to them overlooking the more mundane details, like how they’re going to handle changes and growth further down the line. Let’s say you wanted to approach the CEO of Pirtek and propose a partnership.
You might have all kinds of grand plans for branching out into innovative new technologies. They, on the other hand, might want to stick with what they know. If you can’t agree on a long-term plan of action, it can lead to a gridlock of ideas, and profits can suffer.
Another difference you have to watch out for is in customer service protocol. Keeping the customers happy about the way you’re running things is essential to the long-term success of any business.
If your customer service standards don’t remain consistent, then your bottom line will go through hills and troughs like you wouldn’t believe. In an ideal world, there’d be fixed standards for customer service that you’d always be able to lean on. Unfortunately, we haven’t made it there yet! If you get into a partnership with a business owner who has a vastly different customer service methods than you, you’ll have a recipe for disaster.
Regardless of the nature of the partnership, your customer service has to be standardized.
Finally, not having an exit strategy in place.
Obviously, when you’re first setting out plans for the partnership, you’re not going to be thinking about leaving it. However, you need to be aware that everyone eventually loses their businesses. They might sell it, pass it onto a family member, or die, but it’s going to happen eventually.
If the partnership takes a bad turn, you’re going to need an exit strategy in place. Before the partnership becomes official, you need to have written partnership agreements in place.
These need to be signed by both of you, and include rules about how each partner can leave the partnership, and under what circumstances. You might think you’ve found your kindred spirit now. However, if and when issues do come up, you’ll need to have provisions in place to settle any disputes.
Going into a partnership can be a great thing, but only if you understand it thoroughly and plan for any pitfalls.