Yesterday I talked about public / private partnerships since that seems to be one of the more common partnerships in telecom these days. Today I am going to talk about how you find a partner that you can co-exist with to make a viable long-term venture.
It’s not as easy as it sounds. I had a partner once who said that finding a good business partner was as hard as finding a good marriage partner, and I think he was probably right. I have seen hundreds of telecom partnerships and a lot of them become totally fractious and contentious over time due to the partners growing apart over time in terms of goals, personalities or vision.
But I have been a part of some very good partnerships and I have seen other good ones, and having also seen unsuccessful partnerships I can talk about what seems to work and not work. Here are some things to consider when forming a partnership:
- Power and ownership share needs to be equitable based upon up front contributions and ongoing contributions. I have seen partnerships who decide up front to split things 50/50 but then resentment grows over time if one of the partners is doing most of the work to make the business successful. It’s okay for the partnership to be disparate and have one partner contribute more than the other, but this ought to then be recognized in terms of ownership and profit distribution.
- You must share the same goals. This is one of the biggest problems that I see in public / private partnerships in that a commercial company and a municipality have very fundamentally different ideas of the way that things can work. As an example, a municipal venture is considered successful when it is cash flow positive, but a commercial venture needs to make more than that to meet return expectations. If both partners don’t have the same goals, then one partner is going to be disappointed with any outcome.
- Make sure everybody understands their roles. In a business not everybody can be the boss. Partners need to decide up front will be responsible for what and then insist that partners fulfill their obligations.
- You must be able to communicate with your partner. Partners must be able to tell each other the whole unvarnished truth. It takes both partners to make a business work, and failure to communicate is always going to lead to trouble down the line.
- You must be able to resolve differences. In a more traditional business the owners or the Board is ultimately in charge and they can resolve disputes by fiat. But if a two-partner firm can’t resolve an issue the business can become paralyzed. Being able to iron out differences is probably the single most important requirement for a good partnership.
- You must trust each other. This goes back the statement that a business partner needs to be like your wife or husband in some aspect. Generally all of the partners in the firm can spend the firm’s money, can commit resources, can make decision. If you don’t trust your partner fully – trust them to be honest, to not cheat you, to do what they say they will do, to tell you the truth – then the business is eventually going to get in trouble. Partners shouldn’t be spending their time watching each other, but in furthering the goals of the business.
- Finally, partners have to be flexible. In telecom a business rarely goes the same as the original business plan and so the partners must be flexible to change as the world changes around them. I have seen too many partnerships that end up quibbling over goals, processes or procedures that were spelled out in the original partnership agreement rather than making the needed changes to make the actual business a success.
I would hope that this list makes it obvious that you have to spend a lot of time up front talking through these issues before leaping into a partnership. For example, you should talk up front how you will go about resolving your first impasse when it pops up. Far too often I see businesses partnering with somebody because they have the same general goal, but if they can’t meet the kinds of goals I have discussed above they are going to have to have a very hard time sustaining a business.