Business partnerships are very useful strategies, especially for start-ups and small businesses where there is a desperate requirement for varying skills and finance. Partnership brings expertise and capital to the table and makes a business grow and prosper at a faster rate.
However, it is important that business partners ensure their company is financially stable. In case you find your company in an inappropriate finance situation, it is wise to secure funds beforehand from traditional banks and alternative finance firms.
If you are a small business or a start-up, we highly recommend that you to secure funds from an alternative finance firm instead of the traditional banks. Alternative finance firms have much quicker turnaround times and lower interest rates when acquiring small business loan. Browse through all their funding options and choose the one most suitable for your business type.
Discuss with your business partners before making any final decision.
We understand, maintaining a profitable business partnership is a challenge for both the involved parties. To let your partnership grow strong, there are four mistakes that you need to avoid.
1: Lack of Written Agreements
Just like a business agreement, having a written contract of your partnership decreases any future conflicts and confusions. With a written agreement, each partner involved is aware of
- Their tasks and responsibilities
- The division of the net income
- Rules around changes to the partnership structure
Business partners starting off without drafting an agreement are putting themselves at a serious risk of future disputes (potentially ending with legal involvements) or dissolution of the partnership.
Hence, it is always suggested, when two more people are responsible to run a business, they should start off any drafting a shared understandable agreement. Best is to hire an experienced business lawyer to draft a written agreement which all the parties involved agree upon.
2: Incompatible Long-Term Outlooks
At the start of any new venture, the parties involved are always optimistic of the chances of the success of their company. However, this can sometime lead to ignorance of certain important details such as
- Where you see your business going in few years
- How do you plan to handle issues and certain big situations along the road
If you and your business partner don’t discuss these certainties, you might find yourself at odds with each other as the issues and challenges begin to surface. Your business will eventually suffer if the both of you are unable to agree on a plan of action to take the venture ahead.
3: Different Customer Service Protocols
Any business success is majorly dependent on how happy their customers are with their interaction with the business. A major satisfaction factor is achieved when customers feel they are given the same importance in every interaction.
However, such quality services cannot be expected from all big companies and such negativity affects the business. The same is for business partners. If all the involved business partners interact with the customers and have their own different ways to do so, it leads the customers to avoid business as whole.
No matter how many business partners are involved in running a company, customer services should be standardized.
4: Lack of Exit Strategy
The last thing on any individual going into business partnership has on mind is leaving it. People usually turn over their businesses. It is either through sales, passing it on to family or through death.
If the business partnership doesn’t seem to be beneficial anymore or turns sour, it becomes even more important to understand the rules around leaving the business. The business written agreement (made during the start of the partnership) should include an exit strategy (rules that explain under what circumstances a partner can leave the business).
The absence of an exit strategy makes it difficult for the partners to make settlements. Hence, it is always advisable to include an exit strategy in the written agreement.
The Bottom Line
A business partnership can take your business to the next level. However, it is not recommended for everyone. It creates tension and there is a possibility that your business suffers if the partnership is not set up correctly. This will eventually result in business failure and loss of resources and money for all the parties involved. So, before you get into a business partnership, seek advice from your lawyers and avoid making any costly and stressful business partnership mistakes.