Sometimes a business partnership can be a creative way to solve a company’s problems. Having the right expertise at the forefront is crucial to making a business operate smoothly. However, forming the wrong partnerships will create more problems than it solves. Before you form a binding business partnership, make sure it’s an ideal match for all parties involved. Here are 4 tips for screening business partnership opportunities wisely to avoid the most common potential pitfalls that partnerships can create.
Evaluate Your Needs
When the opportunity arises to partner with someone whose expertise would be beneficial to your own business, it can be tempting to jump into a deal without considering other options. However, forming a partnership may not be the best possible way the two of you could work together.
Would it be possible to work with this person on a consulting basis? Could you hire him or her as a top executive in your company instead of forming a partnership? Could you create a contractual agreement to have his / her business perform mutually beneficial services for your company? If it’s possible to give up less than a portion of your company yet still end up with the same results, creating another type of agreement may be preferable to forming a business partnership.
Trust should be the foundational basis of any worthwhile partnership. If you’re not absolutely positive that your prospective business partner is completely trustworthy, it is unwise to form a partnership in the first place. Can you trust this person with your company’s finances? Can you trust him/her to carry out his/her agreed-upon tasks and responsibilities? Could you count on him/her to make the right decisions in situations where you aren’t present to help guide the outcome? The answer to these questions needs to be an immediate yes without any hesitation.
Align Your Goals
Business partnerships can go awry when goals are mismatched. If you want to create partnerships with the best odds for success, it’s wise to choose partners whose corporate goals are the same as yours or at least very similar to yours. Compare notes on where your prospective partners want to be in 5 years, 10 years and 30 years. If there’s disharmony in any of the answers, it’s better to negotiate a short-term relationship rather than form a long-term partnership.
When choosing a manufacturing service to partner with, it’s beneficial to work with a company that has fabrication expertise in the types of materials that will comprise your ideal finished product. For example, if your product is a sewn and stuffed toy, you’re likelier to have success partnering with a sewn products manufacturer rather than a manufacturer of hard plastic toys. This is true even if the sewn products manufacturer typically makes dresses or pillows rather than dolls and toys.
If you make anything involving metal parts, partnering with a sheet metal fabricator like Degree C Pty Ltd or a similar business would make sense. Perhaps your product is a new invention that has not yet been patented. In that case, it may be beneficial for you to find a manufacturer who is willing to sign a non-disclosure agreement. Many are unwilling to do this. It is as important to protect your intellectual property as it is to find a manufacturer capable of producing the products you need.
These are 4 important tips for choosing business partners. Following these suggestions will help you to maximize the likelihood that any partnerships you decide to form will proceed successfully. The goal is to create partnerships that will undoubtedly be beneficial ones for both parties far into the future.