Partnerships, the cornerstone of collaboration, often arise from shared goals. They can however bring up many complexities that extend far beyond the actual business. The foundations of a successful business partnership are formed through intricate discussions, decisions, and emotions which are respected and handled together.
Understanding the undercurrents of a business partnership can pave the way for harmonious cooperation, creative endeavour, and ultimately success. Nonetheless, reportedly up to 70% of business partnerships actually fail, with many similar scenarios and feelings contributing to the inevitable demise.
We break down ten things you need to consider when entering a business partnership, and how Nordens can help your partnership blossom to new heights…
Aligning Desires: Beyond the Common Ground of Money
Money, a universal driving force, often serves as the initial motivation behind a business partnership. However, no two financial circumstances are ever the same and that’s often evident in a business partnership. Different financial backgrounds among partners can also create nuanced dynamics, especially so in cases where financial securities aren’t alligned.
For some, a business venture might be a light-hearted pursuit, while for others, it’s relied upon as a vital lifeline. Recognising and reconciling these disparities can make the path forward simpler and more streamlined. It’s crucial to have these conversations beforehand, helping to align your goals and aspirations for the business.
Engraving Agreements in Stone
In the nature of business, detailed and thorough documentation isn’t just a luxury, it’s an imperative for all businesses. Agreements, however solid they seem in conversation, often reveal discrepancies when put into official writing. This is something that our Company Secretarial department can support you with through drafting up directors and shareholders agreements, confirmation statements, articles of association, as well as insightful advice on company structure and incorporation.
We’ve helped thousands of small businesses start their business journey, providing an experienced, personal, and tailored service to exactly how you wish to operate and define your business. If this sounds of interest, then get into contact with our Head of Company Secreterial, Natalija Rynkevic, for a complimentary consultation to assess your options.
Embracing the Work Ethic Spectrum
A common issue which arises in business partnership are the discrepancies when it comes to effort and dedication. While the excitement of a new partnership is invigorating, unveiling the nitty-gritty of work expectations is essential. Beyond the surface and initial hysteria around starting up a business, lies a gruelling journey of long working hours, emails during downtime, and even hard work during vacations when you should be relaxing. All of these inevitably have a direct impact on a person’s mental health, as well as any close personal relationships.
Peeling back these layers to form tangible expectations through clear communication is the foundation of a fruitful collaboration. It’s necessary to acknowledge that equality isn’t synonymous with equity, as diverse work habits can be balanced through compensation.
Valuing Contributions: A Balancing Act
In business partnerships, the valuation of contributions can often emerge as a delicate subject to breach. In many circumstances, a business partnership can often be a person doing much of the operational or physical side of the business, whilst the other takes care of business, compliance, or financial affairs.
These distinct roles can breed tension and feelings of underappreciation. Grappling with differing viewpoints highlights the inherent bias towards self-appraisal and acknowledgement from your partner. Fostering appreciation and respect for each contribution and acknowledging worth is the solution for a cohesive and well-maintained partnership.
Conquering the Crossroads: Making Tough Choices
As a business partnership matures, challenging decisions always loom on the horizon. This can often lead to differing opinions and a stubborn outlook from both parties resulting in a roadblock. Calculated and careful forethought is the key to conquering these moments.
Dividing decision-making rights among a partner’s strengths and experience may seem easy and logical, yet it’s imperative to outline strategies for high-stakes decisions where differing opinions collide head-on. Unavoidably, you’re going to disagree with a business partner at some time or another. Like in any other human relationship, it can never be plain sailing all the time. Preparing for this is key, and often only takes a few conversations to set in stone the strategy behind a difference of opinion.
A Symphony of Conflict Management
As we’ve mentioned, conflict is a natural and inescapable by-product of partnerships. Understanding and respecting one another’s conflict-handling styles before clashes emerge can help maintain and subdue serious and detrimental confrontations. A partnership that survives conflict by striking a harmonious balance, serves as a testament to the power of open dialogue, empathy, and boundary-setting.
Charting the Course: Unveiling Business Strategy
Business strategy is the underlying foundation that can either unite or divide partners. Strategy often comes down to emotionally detaching yourself from the business, and making tough decisions which others may not agree with.
This is an area where our Strategic Advisory division is completely adept in, providing an unbiased and often invaluable viewpoint. This can often be the difference in disagreements or issues in a business partnership. Leveraging our expertise can help business owners streamline processes, mitigate risks, and optimise business operations.
We pride ourselves on bringing a fresh set of eyes to the table, offering an objective and impartial assessment of the business. If this sounds of interest, then get in touch with our Director of Strategic Advisory, Joe Sword, for a complimentary consultation and assessment on the health and direction of your business.
Equilibrium Amidst Inequality
Equal partners is a somewhat endearing phrase to base a business partnership on, yet its complexities are generally inherent from the offset. Usually, material and interpersonal inequalities form the backdrop of these differences. The challenge and solution lies in sustaining trust and dedication amid these inevitable inequalities, which is of course easier said than done.
Power discrepancies are another sensitive subject that needs careful consideration when entering a business partnership. As long as empathetic, compassionate and clear communication is regularly present, this can provide the perfect anecdote for these concerns.
Division of Spoils: Navigating Compensation Complexities
Compensation is what it all boils down to when it comes to fairness and respect in a business partnership. This initiates forthright conversations about personal responsibilities and family commitments that can be difficult but ultimately are necessary.
Navigating these matters involves a clear outline of shareholdings and responsibilities. As stated, this needs to be documented in an official format through articles of association. Fortunately, these can be revised and revisited, which is something Nordens can assist with.
The Art of Closure: Navigating Endings
All partnerships must conclude, a reality that can herald triumph, tribulation, and sometimes both. Preparing for this inevitability from the start is essential. Ownership transfers, intellectual property, and communication protocols surrounding departure can serve up a lot of issues and headaches.
The solution is for clear, early agreements from the beginning that enable the breakup to conclude in an amicable manner. This naturally avoids discord, stress, and prolonged legal battles on both sides. Conversations and clear communication are the compass for steering the vessel towards the calmer waters of understanding, synergy, and lasting success.
We hope this has outlined to you some of the conversations that should be taken before entering a business partnership. If you’d like to know any further information, or anything accounting related, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy to talk you through your query.