Every successful new business partnership requires three things: Finding someone who can add value to your business, operating in a growing industry, and partnering with people who can bring additional finances or resources to the table.
Too often, business owners throw these principles out the window when rushing to find a partner, which results in damage for both parties. Your business needs to work before you seek any sort of business partner — BEE or otherwise.
Why do you want a BEE partner?
Too many business owners see BEE partnerships as a last-ditch attempt to save their business, and too many others wait until there’s a big tender they want before seeking out a BEE partner who can help them to meet the requirements.
Good business partnerships don’t happen overnight. It might take you 18 months to work out a BEE partnership, and for it to be successful you need to have the right motives.
Great BEE partnerships are mutually beneficial and based on growth potential for all involved.
Match vision and values
Once you have a successful business and are considering a partnership, start by looking for a match in values and vision. Each party needs to be clear about their role. Like any partnership, a great BEE partnership is built on alignment.
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What value will you add for each other? What skills set do you lack? Look for that in a partner.
You want a partner who will sit around the boardroom table with you. It’s not about buying connections or having someone who lives in a different city and pops in every six months.
A good partnership involves face time. BEE is good for your business and for the country, but only if done properly. Fronting is damaging to everyone.
Find a partner who delivers value
Many SME owners form BEE partnerships without first considering the business implications. A successful partner is ideally someone who can put money and skills into your business (which also proves their commitment to it), or source additional funding from bodies like the NEF and IDC.
It shouldn’t be about giving away free shares in your business. If your prospective partner can’t help with financing, however, there should at least be a promise of adding value and skills.
You can structure your deal so that your partner’s shares increase as they add value at an operational level.
Related: How to Navigate the B-BBEE Maze
Sourcing the right partner
If you’re looking for a BEE partner, you need to network in the right environments. Just as you would when making any important decision, get input from people you trust.
Your lawyer, accountant or supplier might know someone who fits your requirements. See it as a courting process though — it takes time to find the right person.
As with any big business decision, you need to do your homework. Have a view of the potential partner’s track record and industry experience.
Ask yourself: “Why do I want to do business with this person?” Look for passion and shared interests. Consider appointing the candidate as a director first, and then address shareholding later. As long as you are both clear on the parameters, this can be a good way to trial “fit”.
Don’t forget the paperwork
Get the best lawyer you can afford to structure the best possible deal for all parties involved.
This protects all of you if things don’t work out. Tie down roles and responsibilities from the outset, ensure everyone is clear on what happens in the event of failure.