Business partnerships are like marriages in more ways than one; many of them end in painful separation.
I mean, it makes sense, right? The lives of business partners are inherently linked together. Your financial interests are tied together, you work very closely with the other person, and you develop an incredibly intimate connection over time.
In the U.S., almost 50% of marriages end in divorce. The numbers for small business success aren't favorable, either: most businesses fail within the first five years of operation.
Still, over 25 million people are involved in business partnerships today. It's a highly prevalent form of creating a new small business. There are tons of perks to having a partnership, too.
What prevents a partnership from failing? How can you be sure that your business's co-founders will stick together, even when things get rocky? Is there anything you can do to prevent a failing partnership's impending doom?
1. Written Partnership Agreements Create a Solid Foundation
When forming a partnership of any kind, both partners must agree to sign a written document detailing the expectations and boundaries of their new venture.
Whether a partnership agreement or a shareholder agreement, a written contract helps lay a foundation for what's to come. A written agreement can help determine when another partner can't perform their duties or what happens when someone wants out. It can prevent many otherwise legal and financial situations that arise when running a business with another person.
Every partnership agreement is different. To craft the right kind of agreement for your business, find a competent business lawyer that can walk you through and advise on the nuance of a partnership agreement.
2. Setting Expectations Prevents Resentment
Every relationship, whether in business, a marriage, or a friendship, requires an effort toward communication from both parties. Conflicts often arise when there are unmet expectations.
Small businesses require their founders to take on many roles. From sales and marketing to finance and operations, running a business takes a lot of effort. Effective communication within your partnership allows you to define each partner's roles and what success looks like.
Trust is established when expectations and needs are communicated from an operational standpoint. As a partner, you rely on the other person to do what they say they will do. If a job becomes too difficult or expectations too lofty, communication is needed to redefine what's required.
Constantly communicating with your business partner allows you to remain on the same page about the direction of your business and minimize conflict. Communicating when expectations aren't adequately met ensures that each partner isn't harboring resentment against the other. Without proper communication, an otherwise successful business partnership can implode.
3. Effective Communication Entices High-Quality Customers
Expectations are a powerful tool, like fences around your house that keep helpful boundaries between neighbors. In a business, setting expectations for yourself, your partners, and your employees keeps everyone on the same page.
The same rule for setting expectations also applies to your customers.
When customers work with any service-based business, they expect to receive a product or service in return for the money they pay. For your clients to see your business relationship as successful, your product or service has to meet their expectations of what your business can provide. For example, if you're a web designer that specializes in church websites, your customers expect that you can create a website for their organization. However, as the business owner, you must also communicate the process for creating a website, how long this website will take to complete, and ultimately what they should expect from you in terms of communication along the way.
When a client's expectations are not met, you'll have difficulty convincing them to work with you again. Unmet expectations can quickly sour any relationship. But, when customers receive a product or service that is in line with or goes above what they initially expected, they see that exchange as successful. Consistently-met expectations create raving ambassadors, ultimately leading to more referrals and like-minded customers.
Communication is a powerful tool. When leveraged correctly, it can mean the difference between a successful partnership with high-quality customer relationships or a floundering business. When you correctly set the expectations of everyone involved in your business, you'll find that you're creating a team that can achieve incredible things.