Things to Remember Before Entering Into a Business Partnership
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Can we do everything alone? It is this question that raises the aspect of why partnerships exist. The world has seen many partnerships crumble into ashes whether in businesses or marriages. The world has also, on the other hand, seen numerous partnerships sustain the tide of times and prove to be more long-lasting than anyone could have ever imagined. The bottom line is that partnerships are tricky be it marriage or business. But what makes it a risky business? And even if there are risks involved, how can you make sure that your partnership is long lasting?
What is a Business Partnership?
A business partnership is a contract among the partners of a firm wherein the terms and conditions of the partnership are clearly stated including the profit-loss sharing ratio, liabilities, assets, investment etc.
A partnership can get your business skyrocketing if you play your cards right. Here’s how you can ensure that the winds of partnership point favourably towards you and your firm.
The Power of Dialogue and Communication
Having a clear stream of communication before assigning the partnership deed and during the normal running of the firm is a very important aspect. The power of dialogue is immense and therefore it is imperative that partners resort to this form of communication to iron out creases in the day-to-day functioning of the firm. Sudhanshu Sinhal, an EdTech entrepreneur and managing director of Sinhal Classes Pvt. Ltd. says, “Many fall-outs in business partners happen because of different value systems. Thus it is imperative that one takes time to know their prospective partners by having meaningful conversations.”
A Shared Struggle
In partnerships, both parties share much more than what is mentioned in the contract or the deed. “Few things that I think one should consider before entering into any business partnership include having a shared long-term vision of partner, an airtight shareholders agreement which brings on a lot of difficult discussion at the beginning but helps avoid a lot of bitterness later and of course, clearly defined roles and responsibilities,” believes Prateek N Kumar, CEO & MD, NeoNiche Integrated Solutions Pvt. Ltd. A shared sense of responsibility among the partners is the iron-clad rule to running a successful business enterprise.
Sanjeev Mukhija, Founder of Breakbounce Streetwear, has experienced this aspect in his business, “In our business, shared learnings with our partners do result in better products for our customers.”
A Step to Stick to
Kumar feels that business partnerships are like marriages, you are in it for a “long haul.” It is therefore important that you stick to the decision of entering into a partnership come what may.
Gaurav Kapahi, Founder of GoldSeat feels the same, “An entrepreneur needs to be clear-headed regarding the purpose for partnering. The decision should not come out of a lack of confidence to lead the enterprise individually.”
Foremost is Framework
In a partnership, partners must not forget the importance of having a framework before laying down any other guideline. “Keeping capital investment and finances in place is crucial for an equal division of power amongst the partners,” Kapahi adds.
Kumar further elucidates that for worst case scenario; partners should reach and work out a sustainable and enforceable “Article of Association” to keep turbulent situations at bay.
It is very crucial for the partners running the firm to be in consonance with each other’s expectations and be totally in perfect accord with the goals and vision of the firm. Mukhija explains, “We first establish the long-term fit of the prospective partner with brand ethos.” He also adds that their focus as a team rests on high quality and edgy products over and above everything. Thus, concluding the fact that partners must be unified to lead their ventures to the road of triumph.