Finding the Right Business Partners
By William R. Patterson
One of the major challenges facing entrepreneurs and business leaders is
finding the right business partners. Great care should be exercised when
selecting associates because the right choice can bridge gaps and assist
in the execution of your business plan. The wrong choice can harm the
reputation and earnings of your company. So, when forming strategic alliances,
you should consider:
Finding Believers in Your Mission
No one will champion your cause like a true believer in your product/service.
Align yourself with those who comprehend the magnitude of what you are
doing and will offer wholehearted support to your endeavors. Those who
align themselves with you solely for monetary gain will often carry a
short-term perspective that will conflict with your long-term business strategy.
Active Partners vs. Passive Partners
Are you looking for an active or passive interest holder in your business?
Do you seek someone who will be involved in the day-to-day management
of the company? Many entrepreneurs opt for passive partners to avoid
having them encroach on the management of the business. If you elect
active partners, it is important that they share the same vision, objectives,
and ethics as your associates.
Smart Money vs. Silent Money
When pursuing financial partnerships, you have several options. You can
choose investors that will solely provide financing, or you can partner
with funding sources that will also offer guidance and help in strategic
planning. Silent money could be the right choice if you have a seasoned
management team and desire total creative control. However, if in both
cases you will surrender the same amount of equity, it makes more sense to
partner with investors who are well-connected and may offer advisory
services.
Complementary Skill Sets
Your ideal operations partner will have a complementary skill set to strengthen
your areas of weakness and allow you to compete effectively. The right affiliations
will, most importantly, shorten or eliminate product and service development time.
Your resources will not have to be spent acquiring expertise in areas where your
partner is already adept.
Alliances
Your ideal partner should be in a position to help you form strategic
partnerships. This person/organization should be able to help you align
yourself with people who can assist in growing your business. Strategic
partnerships can also bring about needed political affiliations.
Growth and Exit Strategies
A major point of contention for many partners is the company’s growth and
exit strategy. Some parties may be content as the owners of a small
business, while others seek to franchise or go public. All parties
should be in agreement on how they plan to access the equity of the
company, whether it be by salary and dividends, or a substantial liquidity
event.
The right partner can ease the road and multiply the profïts of your
business. Whether you’re looking for investment funds, advice, a
complementary skill set, or helpful associations, choose your relationships
wisely.
Next: Creating a Sound Business Plan
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