Finding the Right Business Partner

One of the major challenges facing entrepreneurs and business leaders is finding the right business partners. Great care should be exercised when selecting associates because the right choice can bridge gaps and assist in the execution of your business plan. The wrong choice can harm the reputation and earnings of your company. One should consider the following
when forming strategic alliances:

Find Believers in Your Mission

No one will champion your cause like a true believer in your vision, products, and services. Align yourself with those who comprehend the magnitude of what you are doing and will offer wholehearted support to your endeavors. Those who align themselves with you solely for monetary gain will often carry a short-term perspective that will conflict with your long-term business strategy.

Active Partner vs. Passive Partner

Another consideration is: Are you looking for an active or passive interest holder in your business? Do you seek someone who will be involved in the day-to-day management of the company? Many entrepreneurs opt for passive partners to avoid having them encroach on the management of the business. If you elect active partners, it is important that they share
the same vision, objectives, and ethics as your associates.

Smart Money vs. Silent Money

When pursuing financial partnerships, you have several options. You can choose investors that will solely provide financing, or you can partner with funding sources that will also offer guidance and help in strategic planning. Silent monëy could be the right choice if you have a seasoned management team and desire total creative control. However, if in both cases you will surrender the same amount of equity, it makes more sense to
partner with investors who are well connected and may also offer advisory services.

Complementary Skill Set

Your ideal operations partner will have a complementary skill set. They will strengthen your areas of weakness and allow you to compete effectively. Their affiliation will most importantly shorten, or eliminate altogether, the development time necessary in particular areas. Your resources will not have to be spent acquiring expertise in areas where your partner is already adept.

Alliances

Your ideal partner should also be in a position to help you förm strategic partnerships. This person/organization ought to be able to help you align yourself with people who can assist in growing your business. Strategic partnerships can also bring about needed political affiliations.

Growth and Exit Strategy

A major point of contention for many partners is the company’s growth and exit strategy. Some parties may be content as the owners of a small business, while others seek to franchise or even go public. All parties should be in agreement on how they plan to access the equity of the company, rather it be by salary and dividends, or a substantial liquidity event.

The right partner can ease the road and multiply the profïts of your business. Whether you’re looking for investment funds, advice, a complementary skill set, or helpful associations, choose this relationship wisely.

How to Choose the Right Condo Conversion Business Partner – Two Minds Are Better Than One

Deciding whether or not to partner with someone for your condo conversions is a very personal decision. While many investors prefer to go it alone, others would never dream of starting anything so big without the security of a partner. Like many things in life, it may require a little trial and error before you either find the right fit or decide to go it on your own. Should you opt for business partner, here are some things to consider:

The Advantages:

Each partner brings a different perspective to the project. This can increase the creative flow and give a real boost to the problem solving process.
Having a partner can often help reduce the stress levels of a big undertaking. Just by having someone to share the issues with can make them seem less daunting
Oftentimes financing is made easier by having a partner since banks see more than one source of collateral.

The Disadvantages:

Different ways of doing things, different ways of approaching issues, and different ways of dealing with others can sometimes lead to confrontations.
Decision making can be difficult when different people have different expectations or goals for the project.
Partnering with someone in business who has been, or is, a friend on a personal level can sometimes damage a good friendship.

If you decide to go ahead and partner up with someone for your condo conversion projects, here are some more things to remember:

This is a business relationship, so treat it as such. Go together to your attorney and complete all the required legal aspects of the company.
Be sure the person or persons with whom you are partnering can bring value to the project. Make certain they have experience, knowledge or skills that are necessary and valuable.
Take care to find a partner who shares your enthusiasm, goals and work ethics. A partnership will not last long if one person feels they are doing all the work. A situation where one partner wants to work 16 hour days while the other wants to work 6 is not going to work out well. And having a partner who conducts business activities in a way that seems unethical or embarrassing is not going to instil confidence in the company with others.
Make certain your partner is someone you can communicate with openly and honestly. You will need to stay in touch on all matters of the business even as you are each attending to different things. Communication that is clear and concise, therefore becomes essential.
In business, it is extremely important to understand your own weaknesses and strengths. When you know these, you can look for a partner who truly compliments you. Find someone who excels in the areas where you are weak and you’ll have a partner who can truly help you and your business to grow.
And most important of all, keep a watchful eye on the relationship, and address issues as soon as they emerge. It is far better to decide to cut the ties if things aren’t going well than to let things fester until resentments form and anger builds.

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About the Author

Matt Sparks is a successful entrepreneur, both offline and on. He is also an amateur rock climber and author. He has written books, articles, and blogs about social business, real estate, finance, New Urbanism, sustainable cities, longevity, and rock climbing.

Find A Business Partner

Tired of going it alone? Is the burden of making all the decisions, providing all the financing and working continuously more than what you anticipated? Or perhaps you’re missing key elements for your business such as assets, skill sets, products or services that could propel your business to the next level. All these reasons and more are enough to hinder the growth of a would-be successful business; therefore, finding a business partner could be the answer to your predicament. The primary reasons, I believe, one seeks to find a business partner is to maximize profit while minimizing risk and effort. I know you’re probably thinking of the old adage which equates partnerships to marriages and we all know how a lot of marriages turn out. But unlike a marriage, a good partnership is not built on emotions and feelings but sound analytical judgment. If executed correctly, a good partnership will add value to your business.

Partnership or Strategic Alliance

Don’t worry a partnering agreement doesn’t have to be a lifetime commitment. In fact, you can and should create a strategic alliance as a way of testing the viability of the potential partnership before you sign a contractual agreement to form a partnership. A strategic alliance by definition is usually less formal and typically has a specific end date. You can develop a strategic alliance with a business or entrepreneur. It can be for a specific project, task or the obtainment of a particular product or service. Developing a strategic alliance first, will allow you to test the arrangement before determining if something more lasting can be established.

SBA Pilots Small Business Teaming Program

Another form of collaboration is “Teaming”. Teaming agreements are for the express purpose of working on a specific project or bid. It allows small businesses to pool their resources for projects or bids too large for one business to handle. The federal government believes so strongly in this, that the Jobs Act authorizes the Small Business Adminstration (SBA) to “make grants to eligible organizations to provide assistance and guidance to teams of small business concerns seeking to compete for larger procurement contracts.” The SBA Office of Government Contracting is executing this provision by asking qualified organizations (for profit and non profit) to compete for the grant funding. Recipients of awards made under this Announcement will be expected to help small business concerns “find other firms that may be interested in teaming with them, assist small business concerns with the formation and execution of teaming arrangements, aid teams of small business concerns with identifying appropriate larger contracting opportunities, and assist teams of small business concerns with the preparation and submission of bids and offers”.

Tips for Developing a Partnering Alliance

1. Develop a Plan – first, you must determine your company’s value and the value you want from the alliance partner. You can accomplish this by outlining your strengths and weaknesses. Knowing what you bring to the table and what you want from the alliance partner helps you develop a strategy.

2. Identify the Right Partner – once you’ve identified an alliance partner, perform your due diligence to determine if the alliance partner is the right fit. Determine the alliance partner’s:

• Objectives
• Financial Position
• Core Capabilities
• Company Culture
• Tangible and Intangible Assets
• Operations and Processes
• Legal Liabilities (if any)

3. Develop the Agreement – Joint Ventures and partnerships will usually require a more formal contract than a strategic alliance. Consider the following when developing an agreement:

• Legal structure
• Equity interests of each party
• Initial capital and any commitments to future financing
• Voting structure
• Decisions requiring consent of the partners
• Commitments to provide technology
• Non-compete undertakings
• Broad scope of any warranties/indemnities
• Basic exit provisions
• Condition standards
• Target timescales

4. Performance Measurements – develop accountability measures with a timetable for goals and benchmarks.

Whether developing a partnership, joint venture, strategic alliance or teaming, it’s always good to consult with your attorney before signing the agreement.

Friends As Business Partners: Three Musts

How can friends who become business partners keep their partnership alive and thriving? This is an excellent question and a crucial one. While getting my MBA at Wharton, I worked for an M&A (mergers and acquisitions) boutique that valued companies. Many of these valuations were for breakups and many of the breakups were not amicable. Often, the “partners” (I use the term loosely since most of the companies were not partnerships but were corporations and LLCs.) had been long-time friends but their working relationships drastically deteriorated over time and took the friendship with it.

This situation is not dissimilar from what can happen when best friends room together in college. I was a resident advisor (RAs) in college and I would INSIST on a room contract. The best friends usually would not want to work through one and sign it, saying they had known each other for forever. I said that best friends were most likely to take the other for granted. Best friends do things to each other that they would never do to a stranger. (This I garnered from other, more experienced RAs and the Head Resident). I never had any best friendships break apart but those RAs who did not insist on the room contract did. Boys and girls, men and women, did not and does not matter. Sometimes over-familiarity does breed contempt.

Therefore, please be aware and think things through no matter how close you are. If you are about to start or buy a business together, write it down!! It is always amazing how two or more people were in the same conversation at the same place at the same time but the interpretations and perceptions of what was said differ. If you wrote the discussion and terms down, everyone is and will remain on the same page.

Specifically, you should create or do the following:

1. Create and operate under a Buy/Sell Agreement. This is crucial. The Buy/Sell Agreement clearly delineates what happens in the event of a break-up, death, offer to purchase the company, and all the other scenarios partners who are friends typically do not consider. In the event of a disagreement in later years, this written Agreement will help resolve the conflict.

2. Clearly delineate who is the highest ranking person in the company, who is responsible for what, and what those responsibilities are. For example, one partner is in charge of sales and marketing and the other is in charge of finance and operations. One person can be the clear final decision maker overall or the final decision can be determined by who is in charge of that area of responsibility. You both cannot be the decision maker for the all the areas. That would be highly inefficient and lead to unnecessary arguments because you will disagree.

3. Place limits on when business can be discussed. Friends partnering is not dissimilar from spouses partnering. In order to continue to enjoy the companionship and foster the friendly feelings that brought the friends together, the friends/partners must take time at least 1x/month, preferably 2x/month or more to socialize without discussing business.

Business Acumen – Buying Out a Small Business Partner

Looking for buying out a partner generally refers to businesses searching for information on how to purchase the shares of another partner. Partners may decide to leave a business if they are retiring, relocating, or otherwise can no longer take part in the business’s activities.

The first step in buying out a partner is to determine how much the partner’s shares are worth. This can be determined a number of ways. Value could be based on the market value of the company, the amount invested by the partner, or a pre-determined price detailed in a partnership agreement.

The next step when looking to buy out a partner is to find capital to finance the buy out. Though most lending institutions do not provide loans specifically for buying out a partner, they do offer loan programs that can be used towards any general business purpose. Most buyouts require large sums of money, and to apply for a large loan, lenders usually require personal and company financial documents, a business plan, and credit reports. Collateral is also required for secured loans, which can provide lower interest rates than unsecured loans.

If a business is looking to replace a partner, it may be able to obtain funding from an investor. Partner investors contribute large sums of capital in exchange for a portion of the business’s profits and a voice in the business’s decisions. In the case of buying out a partner, an investor could purchase the shares of the leaving partner and become part of the business.

Small business buying out partner usually refers to small business owners searching for information regarding buying out another business partner. Partners may wish to sell their shares of a company when they retire, relocate, or otherwise can no longer take part in the business’s activities.

The first step in buying out a partner in a small business is determining the value of the partner’s shares of the business. To resolve this problem, many businesses with two or more owners create and sign a partnership agreement that predetermines the value of every owner’s share of the business. For partnerships that do not have an agreement like this, the value can be determined by looking at how much the partner invested in the business or how much the business is currently worth on the market.

Once all partners have agreed on a selling price, the owner buying out must find financing. Most lenders don’t offer loans specifically for buyouts, but their loans can usually be used for any business purpose. Buyouts typically require large sums of money, and lenders have more extensive requirements for large loans. To get a lowered interest rate, many borrowers use personal or business assets to secure the loan.

Another source of financing for a small business buying out a partner is another investor. If a business owner can find an investor who is willing to purchase the other partner’s shares, then the owner will not have to take out another loan. The business owner simply gets a new partner to work with.