Business partners, like parents and spouses, are rarely perfect. The acid test of a good business partnership is whether each partner feels better off with the partnership than without it.That requires each partner to perceive the business as a success and to regard the contributions of his or her partners as critical to that success. Only embark on a business partnership that promises to pass the test.
Here are a few things to keep in mind when evaluating a potential partnership:
Achieving success will require you and your partners to agree on what success looks like. The most frequent objectives of small-business owners are to be profitable and have highly satisfied customers.
But clearly, entrepreneurs may have other goals relating to size, growth, innovation, risk-taking and the cultivation of respect and recognition within your industry and community.
It will be difficult for you and your partners to agree on strategy and tactics if you don’t agree on the definition of success. Business goals are often a reflection of your personality and your stage in life. As these change, your goals may change, too.
One of the most obvious reasons for partnering with others is to enlarge the skill mix of ownership.
While you can hire someone with almost any skill, you can’t hire individuals with the same level of commitment to success that ownership has. The time-honoured division of labour into “outside activities,” like sales and business development, and “inside activities,” like operations and management, still makes sense for many businesses.
More recently,having a technology savvy partner can offer huge advantages for many types of firms. Even if partners play similar functional roles – as is often the case in small, professional service firms – it’s useful to have partners that cater to different types of clients. Skill differences are among the most healthy and productive differences that business partners can have.
Business owners make hundreds of decisions about how to run their business: whether to operate a formal or informal office environment; whether to have many meetings or few; whether to have an open floor plan or individualised offices; whether or not to have company outings; how frequently and how best to conduct employee reviews;the type and number of administrative staff; and so forth.
For the most part,there are not any right or wrong decisions, no “best practices” that work for every company. Such decisions are often simply a matter of taste and aren’t worth arguing over. Yet argument is inevitable unless you and your partners’ tastes are compatible to begin with.
Share (and Often Share Alike)
While you might suspect that compensation comprises one of the most difficult partnership issues, in many cases, it may be among the simplest. Unless there’s a good reason to do otherwise, partners should receive a fixed share of profits (and in many cases, an equal share of profits).
Performance measurement systems only exist because of “free rider” problems in larger organisations, that is, the tendency for people to slack off when their contributions can’t be directly observed. In a small organisation, it’s assumed that everyone is doing everything possible to contribute to the success of the business. If that’s not the case, the partnership will have problems that no compensation system can fix.
Trust – but Verify
As Milton Friedman, Ayn Rand and generations of economists have pointed out, people pursue their own self-interests. That’s as true of great business partners as it is of anyone else. But business partnerships work in spite of self-interest because partners have mutual interests (shared goals). But shared goals aren’t enough. Trust and transparency are equally important.
The importance of trust is obvious: You’d never go into business with partners whose honesty and integrity you questioned.But transparency in business processes is also critical.
You and your partners may have discussed and agreed on critical matters involving pricing, contract language, budgets, expense accounts and the like, but the temptation to effect self-serving change at the margin is always present. The most effective way to prevent this behaviour and the conflict can lead to is to ensure that the decisions of all partners are as transparent as possible.
On a practical level,this means ensuring that critical business documents and data are continuously updated and available for easy inspection by all partners.
One of the most reliable predictors of partnership success or failure is whether partners improve the decision-making process.
Partners with shared objectives and a shared understanding of how to reach those objectives make better decisions as a group than they would on their own because they benefit from the diversity of knowledge all the partners bring to the process.
Conversely, with the wrong partners, shared responsibility for decision-making will slow the decision-making process and lead to worse decisions than the partners could make on their own.
Public Private Partnerships Can Work For Entrepreneurs
Property Point will develop 16 small business in the property sector of which two thirds are youth and women owned.
In a landmark partnership for collective economic growth in South Africa, the Department of Small Business Development (DSBD) joined forces with Property Point, a Growthpoint Properties initiative, to develop more small businesses for South Africa’s property sector. DSBD has allocated a R5 million grant to Property Point for a one-year small business development programme as part of its Enterprise Incubation Programme (EIP). This breakthrough initiative is the first public-private partnership of its kind in the property sector. It will develop 16 small businesses in the property sector of which two thirds are youth and woman-owned.
For this unique 16-business intake, Property Point’s programme is powerfully market driven. It will raise the profile of the entrepreneurs and strengthen their competitiveness, with a deep focus on market integration. The programme aims to create market linkages for these small businesses that will see them included in procurement opportunities in the broader property sector, as well as Growthpoint. It is expected to set new benchmarks for small business integration into private sector supply chains.
Estienne de Klerk, CEO of Growthpoint South Africa, says: “We believe in the principles of social and economic transformation and empowerment on all levels, and we are committed to achieving this. As a hands-on property owner, we own and manage our buildings – we recognise our unique position to develop small businesses to increase their access to market opportunities. We are proud to contribute to this pioneering public-private partnership designed to deliver on South Africa’s transformation, small business, economic growth and job creation objectives.”
Shawn Theunissen, head of Property Point and head of Corporate Social Responsibility for Growthpoint Properties, says:
“Property Point’s objective has always been to contribute to South Africa’s economic growth. Using a best practice model, we have delivered positive results in our new partnership with government. This will escalate our impact on transforming the economy at a crucial time when South Africa is dealing with high unemployment and low economic growth.”
The beneficiaries of the Property Point and DSBD partnership have advice on how other entrepreneurs can make the most out of similar programmes:
Advice from Zoleka Ngema of Senzee Trading
- Be honest this helps you define your position and helps you view the real issues in your business.
- Do every task diligently every business is different and what works for one might not work for you, so working diligently personifies the tasks and therefore adds value to your business.
- Lessons are continuous remember & do the tasks done as these will create a cycle of growth even after the course is over.
Advice from Sibongile Shikwambana of Sandwind Coatings
- Be fully present, participate and take advantage of every single opportunity
- Drive your own business agenda; recognise that you and no one else can make your business successful
- Build and maintain meaningful relationships.
Advice from Teko Motlhabi of Techmo Air
- Try to be present and involved with all the activities and opportunities handed to you
- Ask for help from the Programme Managers and the rest of the team when you need it
- Create relationships with your fellow entrepreneurs and collaborate.
How To Partner Successfully With A Younger Boss
Age sometimes seems a lot more than just a number
Just a few years ago, millennials surpassed Generation Xers to become the largest cohort in the United States workforce, according to PEW research. As a result, more and more young people are assuming positions of management.
Being managed by someone younger can feel uncomfortable.
I have to admit, I get into the habit of comparing myself to other people. Those who are younger than us who have advanced further professionally can make us feel inadequate or resentful.
At one of the start-ups where I worked, one co-founder was a decade younger than me. At first I felt awkward with the heavy slate of marketing, sales and social media duties she assigned me. It wasn’t too long, though, before we settled into a groove and formed a strong working relationship.
Creating a bond with a younger manager can have significant positive effects on your own career. Here’s how you should manage it:
Identify skills that helped your boss advance and develop them in yourself
Even innovative businesses will adhere to rules of thumb. One rule of thumb many business leaders believe, rightly or wrongly, is that experience is valuable in and of itself. If your manager is younger than you, it means she probably had to overcome stereotypes and false assessments to get there.
Rather than assume your manager is a young punk who had a managerial role handed to her, work on identifying the skills that helped your boss to succeed. By developing the same skills within yourself, you’ll be more likely to enter a managerial role as well.
To get started, consider asking your manager point blank to identify the skills that she thinks were most useful in propelling her career forward. Once identified, make it clear that it’s a goal to develop those same skills within yourself. A good manager will take this conversation as a sign that you are a driven professional.
Alternatively, you could have a conversation with the person who decided to promote your manager in the first place. As long as you position your question to ensure that it sounds like it’s coming from a good place, the senior manager should have no problem sharing this information with you.
Think of your relationship as a partnership
Your manager is not your parent or your babysitter. If it feels as though your manager is overbearing, have a conversation with her about it. Otherwise, you should treat the relationship you have with your manager as a partnership.
Chances are you are both being evaluated on the same or similar metrics. If you fail, your manager fails, and if your manager fails, you fail. By changing your perspective on this important professional relationship, you may find working with a manager who is younger than you to be more comfortable.
Related: Build Better Business Relationships
Most managers simply want to ensure that whatever they’re working on is completed in the best way possible. They’ll be happy to work with employees who are collaborative, open to new ideas and motivated to get the job done.
In return, a manager who is satisfied with your work can make it more likely that you will also find yourself in a management role someday. If nothing else, you can consider leaving your current company and listing your current manager as a reference if you are able to develop a strong relationship.
Trade experience for new ideas
Both you and your manager have important knowledge that can be made more valuable when put together. You probably have accumulated wisdom from on the job experience, and your manager might have a fresh perspective or innovative new ideas.
Together wisdom and innovation can form a valuable pair that propels both you and your manager to success.
Make sure you make it clear that you are open to new perspectives and new ideas, and offer your experience when appropriate to guide your manager to making smarter choices.
Encourage open feedback in both directions
Feedback is a critical component of professional growth. So much so that companies like Goldman Sachs are overhauling their feedback processes to boost employee performance. As a younger manager, she may feel anxious or conflicted about providing you with honest feedback. Instead, “manage up” and invite your manager to provide you with honest feedback.
In doing so, you will also set expectations that your manager should invite candidate feedback from you as well. By creating open dialogue between you and your manager, you’ll accelerate your professional learning curve and avoid passive aggressive moments.
Though your manager may be younger than you, she earned the privilege of managing a team for a reason. As an ambitious professional, it’s your job to understand why your manager earned that role and to begin cultivating the same skills within yourself.
Instead of feeling resentful, partner with your manager to share feedback and wisdom as you both work to achieve success.
By committing yourself to professional self-improvement, you may soon find yourself managing your own team of people who are older than you.
This article was originally posted here on Entrepreneur.com.
The Case For A Business Partner Who Makes You Uncomfortable
Should you even have a comfort zone?
As humans, we love living within our comfort zone. Science tells us that our comfort zones are a place where activities and experiences fit a pattern and a routine that we’re used to. It’s a place of minimum risk for us, which is why it feels so good to stay in that bubble. The idea of adding experiences and actions that could be stressful, lead to failure or worse is not appealing to our minds. So, we get into comfortable routines and rationalise why we are not doing all the things we’ve dreamt and talked about doing in our businesses. This is a familiar pattern that we’ve repeated most of our adult life.
As you grow a business, there comes a point where it makes sense to bring in others who could help the business grow.
This could be a business partner, it could be a board of advisors, or it can be contractors that do tasks we’re not qualified to do. There is a safe route where you can bring in only what makes you comfortable and only entrepreneurs that are YES people – they agree with what you do and say even though they know it’s not right. Or, you can take a different path. You can explore the zone right outside of your comfort zone.
Charlie Munger is the vice chairman of Berkshire Hathaway. Warren Buffet describes him as “his partner.” They have been in business together for 56 years.
Munger has been quoted saying, “we don’t agree totally on everything, and yet we’re quite respectful of one another.”
Over the years, the advice Munger has given Buffet has not been as a yes man to Buffet, and for that reason, both have flourished. They’ve built an amazing company that keeps growing every year.
In April of 1975, Bill Gates and Paul Allen formed a partnership that led to a little company called Microsoft. You are probably using some of their products as you read this article. Their company has become one of the largest in the world. These days, it seems their partnership is not what it once was but it was those early days of partnering with someone who made Bill Gates step outside of his comfort zone that helped the company grow. They complimented each other in different ways. They weren’t yes partners. They pushed and challenged each other and that’s what led to growth.
A wise man once said that if you’re not uncomfortable, you’re not growing. We have run from discomfort when the reality is that there are situations in which the discomfort comes from growing. When you can learn to embrace the opportunity to get uncomfortably from growth, you can take your business to whatever the next level is for you.
There are things you excel in. There are things you’re not so good at. The right business partner – and business partnerships – can help complete the areas you lack. We know that we’re the average of the people we associate with. Traditional logic tells you to associate and partner with people that make you comfortable.
While we want to associate with people whose personalities match, we want to seek out entrepreneurs that will push, inspire, motivate, and challenge us in the ways we can’t do for ourselves.
You want a business partner that will call you out when you’re clearly making excuses. They will challenge traditional ways of thinking about growth strategies. They will inspire you through the actions they’re already taking in their life and business. They walk their talk and let their success doing all the talking for them publicly. They are sincerely invested in seeing you succeed without expecting anything in return. They have love for you. They will stay with you through the good times and especially the hard times.
Don’t pick YES entrepreneurs or add them to your circle. Pick entrepreneurs that make you uncomfortable in a way that leads to growth in life and business. You only get one life to live. You have a goal and dream for your business. The right partners or partners can help you get there in a way that helps you scale.
This article was originally posted here on Entrepreneur.com.
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