Should you form a partnership with another business? Partnering can bring many benefits to both businesses, but there are also downsides. Here are five questions you should ask before partnering.
There may come a time in your business ownership lifetime where you are asked to consider partnering with someone. On the surface it may look like a nice way to increase the size of your customer base, or it may look like a quick fix to save your failing business, or it just may look like a smart way to stay stable and in business longer. But it’s very important to truly analyze your situation and the partnering option. And to be very selfish as you go through this thought process. In my opinion, you need to ask yourself the following five questions to really give it a good analysis.
Do I have enough work to make it viable?
First off, is it worthwhile? If I only have enough work right now to keep myself mostly busy, then will I benefit from partnering? That question can only be answered by looking at your partnering options and seeing what they bring to the table in terms of skills and current customer base. It may not be easily determinable, but by taking your time to assess the situation and your potential partner, you should be able to come to a reasonable solution. And for me, the final answer when there is any doubt is ‘no.’
Will partnering add exponential benefits?
If partnering doesn’t add exponentially to the revenue base, then there’s really no benefit. If 1+1 doesn’t equal any more than 2 by partnering, then why bother? You could get that yourself by just adding more customers (understanding of course that that isn’t always easy…it takes time and more effort). But to really benefit from partnering, you need someone who complements your current business offering and brings in new customers that want multiple services that this new partnership can offer. Otherwise, it’s probably just not worth it.
Will my interests be served?
Right now, you’re not partnering so you need to look after your own interests. You are the business. Will partnering serve your best interests? Will your business benefit from it as well as your potential new partner? If the answer you come up with is either ‘maybe’, ‘I don’t know’, or ‘no’, then there’s no way you should be partnering with anyone, at least not at this time. You can re-assess it at a later date.
Could I lose customers through the relationship?
Is it possible you could lose customers through the partnership? Meaning, could you end up driving some away with your slight change or major change in direction? I’ve seen it happen…the business isn’t quite the same and dedicated customers leave. Or worse, the partnership falls apart and customers leave with the new partner. Ouch. This goes back to making sure that your best interests are served. Stay focused on being selfish. That’s critical during this assessment.
Am I opening up my business to new risks?
Finally, what about the risk factor? Any partnership will add some risk, but does this one option seem to be adding more risk than you are comfortable with? Is the potential partner adding a risk element that wasn’t there before just in the services that he is offering? Again, think about what is best for YOU and YOUR BUSINESS. You have to be selfish before making a final decision. If you’re not desperate, don’t make the move. If you are, then make sure you weigh carefully the options of either partnering, changing directions, or closing up shop altogether. Sometimes shutting down is safer or a better option than inviting in a new partner.
The bottom line is – do what you are comfortable with. If a partnering option at this stage takes you too far out of your comfort zone then it may not be the right time. I’m not saying don’t ever partner. But I am saying that you must be sure before entering into this kind of legal business relationship because it can wreck your business if you don’t handle it properly or you do it for the wrong reasons or without enough forethought.