The Six Building Blocks of a Profitable Thriving Partnership

Have you ever entered into a partnership with someone then found, much to your surprise, that a few months (or years) down the road that the partnership has blown up? Kinda like the moment you discover your wife/husband/girlfriend/boyfriend is no longer the person you want to spend your life with and you are about to break up.

So how do all those people with thriving business partnerships make it work?

They put some very specific elements into action early in the arrangement. Now, these elements will vary slightly depending on the type of business partnership you've entered into. But in general these building blocks will set any partnership up to thrive.

Building Block #1 - Complimentary Strengths

The first important piece is clarifying what both parties bring to the table. Are you aligning with someone who is your "compliment" or your "clone?" Typically for a partnership to thrive you need to have different strengths and assets that complement each other. For instance, one partnership that is set up to thrive is a company called NAME OF COMPANY. They have three partners, each with their own specialty: operations, marketing, visionary & creator.

Action: When evaluating someone as a partner, create a list of strengths and passions for each person. Make sure they compliment vs. being identical or having too much overlap.

Building Block #2 - Clarity of Roles

I've counseled many great entrepreneurs over the years on how to address the sticky issues between them and their partner and the common breakdown was always a lack of clarity around "who does what." Many years ago I worked with a husband and wife team that constantly got into major wars over who was doing what that slowed progress down and left them both emotionally drained. Unfortunately both of them really enjoyed creating and no one wanted to do the operations. The remedy that finally worked was putting into place clearly defined roles as well as outsourcing a majority of the operations management to a 3rd person.

Action: Start the partnership off right by putting the partners names by each "function" of the business they will manage and creating role descriptions.

Building Block #3 - Agreements

I know it sounds kinda icky and very "formal" but having a written agreement of how you will operate together is essential for good will. Many years ago I was in discussions with a good friend on creating a partnership to deliver some high level programs. We got bogged down when it came to me wanting to create a written agreement. This person thought it was too "formal." I decided to exit the discussions. A written agreement acts as a grounding tool for all parties to truly think through how you want certain operational and financial aspects to be handled. It's really easy to keep it all in your head than if something goes awry and have a "he said/she said" situation.

Action: Document your agreements of how you will work together and handle areas of potential confusion or conflict in writing. If the value is over $25,000, consider getting legal advice.

Building Block #4 - Communication

Imagine having someone inside your business that affects your bottom line - who continually makes decisions in a vacuum. You find out about these decisions when the bill arrives or the deadline is past due. This happens all the time in fast-paced organizations where the partner(s) don't slow down to have regular, consistent communication. One company I coached recently was so broken that the founder refused to follow any kind of communication protocols - it was just not "fun" for him. The impact to the other partner was a complete loss of morale, extra work and a continued contemplation of leaving the partnership.

Action: Determine a mutually-beneficial communication process such as a weekly or monthly meeting; email or documented "update" system. The small amount of time it takes to be proactive will have HUGE payoffs in the long run.

Building Block #5 - Respect

This may sound obvious...but I've learned it's not. If you don't respect someone it's hard to like them. If you don't like someone then you will most likely not want to be around them very much. I can't imagine a more tedious and stressful situation than to have a partner that you don't want to be around. Having a respect for the person(s) you partner with is critical to thriving and being profitable.

Action: Tell yourself the truth - do you respect and like the person you work with. If not, get out (or don't start anything). It's just that simple. Really.

Building Block #6 - Exit Strategy

You've probably heard over and over again how important it is to start with the end in mind. As a matter of fact, industry statistics show that 70 - 80% of business partnerships fail within the first five years. That's almost as staggering as the California divorce statistics! Let's take a hint from our marital legal community - get a pre-nup. If you've got assets to lose, start your "marriage" with clarity on how it will end. I know, I know not a very positive mindset but the truth is that many partnerships fail. So get agreement up front while everyone is still happy and agreeable on how you would handle someone wanting to leave or if you choose to dissolve the partnership.

Action: Create a written exit plan as part of your agreement. Determine how you will handle money, intellectual property and assets. Look at all possible scenarios and address them. Again, get legal support if necessary.