SMALL BUSINESS SURVIVAL TIPS NEWSLETTER: March 2010

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This month's topic is about building strong partnerships...so who better to participate in the discussion than my own business partner, Barry Horwitz. Barry runs his own consulting practice, Horwitz & Company, here in Boston and we've worked together for 3 years at Boston University.

In the last year we started collaborating on a variety of projects ranging from a program we're developing for medical device firms in China (through BU) to conducting market research for a high-end women's clothing consignment business seeking growth. Our working relationship has evolved gradually into a partnership as we have seen how our skills align and complement each other's.

Therefore, I asked Barry to address three main concerns related to partnerships:

1. What is a partnership?
2. What are the advantages of creating a partnership?
3. What are the pitfalls to be aware of?

He'll also share 4 questions to ask yourself if you're currently exploring a partnership with another firm or individual. I'm sure this topic will give you a lot of food for thought.

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Beth Goldstein

The Art of Partnering

What is a partnership?
Partnerships are very valuable and important relationships for businesses, both large and small. A strong partnership can lead to greater effectiveness and stronger results for both parties. However, good partnerships take time to develop, and require significant effort to sustain.

A true partnership is a serious relationship between two parties that (a) share a common goal, and (b) that have joined together to achieve something specific. Partnerships require a lot of effort, a lot of mutual trust, and a champion on each side to manage the relationship in order to work.

Advantages of Creating a Partnership
A good partnership can open doors to business opportunities that are otherwise too hard or too expensive to achieve alone. For entrepreneurs looking to build a new business - or expand one - a strong partner can be a critical resource. For a company like a consumer products firm seeking to launch products into a new industry sector, partnering with a company that is already integrated into the channels of distribution for that specific sector can make market entry easier and more realistic to achieve.

In the late 1990's, a colleague of mine developed an idea for a new business he wanted to launch. He had experienced failure in his prior start-up, and felt that I had the right complement of skills to fill in where he had gaps. We worked together for several months, developing and refining the business concept and crafting the business plan. But we were not yet "partners;" we were simply working together.

Over time, we saw how well we worked together, and confirmed that our skills complemented each other's well. And we came to see how each of us made specific contributions towards getting the business idea funded. Over time, we continued to refine how we defined our respective roles, and through mutual agreement, my role grew to be that of chief operating officer. We had become partners in the business. And as partners, we were successful in raising venture capital to launch the business, and built it up to a 36-person company with offices in four cities over three years.

Potential Pitfalls
In my consulting practice, I have worked with several entrepreneurs who have taken the concept of partnership too lightly - making commitments too quickly and jumping into relationships before being sure that they were the right fit.

For example - I have been working with the founder of an emerging company with a small team that is just starting to get some traction. She is trying to evaluate several new opportunities simultaneously and identified one of her team members as her "partner" since he "challenges her thinking." However, what I witness is that they have very different visions of how the company should grow and when. Though the arguments this individual may well serve to challenge her thinking as the founder, but he is also holding her back from evaluating which options for growth are best for the company.

There are more serious consequences to calling this a partnership prematurely. Because this relationship was labeled a partnership very early on in the business, this "partner" has high expectations about the percentage of the company he thinks he will own, and his role in decision-making. But now that it has become clear that he doesn't have the requisite skills for the larger role, my client faces some difficult discussions. She must decide whether reducing the partner's position to more of a consulting role is best for the company and she must also figure out what to do to address the expectations he has of being granted significant ownership in the company.

Of equal importance and consequence, the other members of her management team find themselves torn, as they try to figure out which point of view will prevail - and what impact that will have on their priorities. And you can be sure the conflict this partnership has caused has had a negative impact on their motivation.

Think Before You Commit

Having the right partner - and the right partnership arrangement - can provide a very powerful boost for your business. But partnerships are not something that you should enter into casually.

Here are several questions to ask yourself before committing to a new business relationship:

1. Have you clearly defined your most important goals, and made sure that your prospective partner shares those same goals?
2. Have you assessed what specific gaps - in skills, in relationships, or in any other assets - that this partner needs to fill in order to help you succeed?
3. Is it clear that both parties stand to benefit more from being partners in this arrangement than working separately? Is this a win-win arrangement where 1+1 clearly equals more than 2?
4. Have you spent the time working with this prospective partner to be sure that the fit is right before structuring the specifics of your partnership deal?

Good luck with growing your business. If you'd like to learn more about my partner, Barry Horwitz, please visit his website: www.horwitzandco.com. If either of us can help you turn your vision into reality, please don't hesitate to contact me at beth@m-edge.com or by phone: 508.893.0976.

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