Considering a Partnership For Your Startup?
Here are a few things to think about before making the commitment.
Many entrepreneurs assume that going it alone is what determines success. But, some of the most successful startup stories come from partnerships. A great example of this is when brand powerhouse Coca-Cola teamed up with startup Wonolo. The on-demand stocking platform was able to help Coca-Cola instantly restock shelves where needed, increasing its product coverage by 25%. Now that’s what I call a win-win situation.
While you may not be thinking of teaming up with huge corporations like Coca-Cola, there are plenty of advantages to choose a partnership. Of course, there are a few disadvantages too, but understanding how a partnership will affect your business before signing on the dotted line is critical.
External partnerships can help startups that have little brand recognition to gain traction in a more established community. This is especially true for smaller sized businesses. It removes a lot of the risk and may even offer new connections. By choosing to partner with brands that share similar values, methods and goals, it’s likely you’ll reach more of your target audience by pooling your talent and resources. Here are a few things to consider when seeking a partnership.
Be Clear About Your Business Intentions
Being able to clearly communicate what you do and how you do it will help potential partners understand how you work. Make sure to be totally honest about your intentions and your long-term goals. Be sure you share the same vision, otherwise things could get messy down the road.
Know When to Say ‘No’
You worked hard to build your business and your brand, so you should never sacrifice who you are for the sake of making someone else happy. If you discover your partnership isn’t going to work, know when to bow out. Make sure that you plan for legal protection ahead of time in case you need to break up your partnership.
Hire an Experienced Lawyer
When it comes to partnerships, it’s always a good idea to make sure that you are protected from any personal liability issues. Having an experienced lawyer will help you with your general partnership agreement to ensure your agreement is drawn up correctly to save you from losing your shirt.
Know Your Role and Your Share
A 50-50 split might sound fair but understanding and agreeing to each partner’s role will help decide if it really makes sense. If your efforts and risks outweigh those of your partner, perhaps your share of the profits should be higher. If you can agree on how you’ll each profit now, there will be no arguments down the road.
Keep it Business First
Naturally, many partnerships start out because of a previous relationship or friendship. It’s best to always remember that business comes first, and you should leave out personal feelings when making important business decisions. Understanding how each partner contributes to the decision-making process will also determine accountability and prevent disagreements.
Like any relationship, a business partnership can be tricky. Choosing to share your business with another person is almost like a marriage. You’ll spend a lot of time together and understanding that you are both taking a risk will be important to the growth and prosperity your relationship. Remember to plan for any and all possible scenarios. Be realistic about your roles, deliverables and goals from the beginning and it will pay off in the long run.
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