There are also very clear rules about roles and responsibilities of owners, directors and shareholders. Hunter says the problem with many start-ups is that those lines of responsibility are not worked out in the beginning. “There needs to be a clear delineation between those three levels,’’ he says. “Often when you get into partnerships when the business is very small, the lines are very blurred.”
Keeping tabs on your partner
Another feature of the framework is that every three months, the company goes off on a strategy session to decide what course of action it should take for the next 12 weeks.
Projects are allocated, roles are determined as to who does what, and the work is then monitored on a weekly basis.
The key here, he says, is that it ensures the lines of communication are always open. That helps keep partnerships healthy.
“By making sure we maintain alignment in the business, we are communicating effectively every three months and thus we avoid those little issues that used to exist,’’ Hunter says.
“One of the problems in that property company was that we would end up not talking for six months, not because we were pissed at each other but because we were all basically doing something else.”
Do you really want a partner?
Business coach Ashley Thomson advises his clients not to go into partnerships. Why? Because most of the time, the would-be partners have not thought it through and as a result, the partnership ends badly.
“With the clients I work with, I find that eight out of 10 partnerships don’t work, one out of 10 work really well and one out of 10 are just okay,’’ Thomson says.
“Everybody is different in their vision, in their targets and what they are trying to achieve in the business and there is always that level of conflict in the partnership where one partner wants to go faster than the other, one partner wants to take it easy, or one partner has a higher appetite for risk than the other.”
“Most say this is a great idea, let’s go and jump in together and a year down the track where one is working a bit harder than the other, or they need to put more money into the business, and one has the money and the other doesn’t, that’s when the issues come out.”
Working on the business marriage
The problem, Thomson says, is that the partners did not talk about these issues before. Any partnership is like a marriage, in fact, it might be even more complicated. And every marriage needs a lot of work to be successful.
Thomson says partnerships work well when there is a clear understanding between the partners as to who is the senior partner who is in control, very much like Hunter’s model.
“Without having that discussion up front, a lot of partnerships go wrong,’’ he says.
He says partners also need a legal partnership agreement that canvasses all the issues. What happens, for example, if someone wants to leave? Or if they die? Who is responsible for what?
“The number of partnerships I have seen where someone has drafted a proper partnership agreement is probably one in 10 or one in 20,’’ he says. “There is all this optimism at the start and no one thinks about the realities down the track.”
He says that partnerships tend to work better when the partners have worked together before. For example, they might have been apprentices working at the same place.
“They know their good points, they know their bad points,” he says. “That for me is a good start. And they need to have the same value system. If one is a shark in business, and the other is not, then it’s not going to work very well.”
Shared goals
Robin Power, the managing director of the Asia-Pacific hub at Affinity Maker, a company that specialises in setting up partnerships, says that the parties need to have common strategic goals and trust.
“Essentially, you have to make sure there is a desire for the partnership on both sides and that there are real concrete things which both sides are aiming for and which are shared,’’ Power says.
“You might have individual objectives but you need to have objectives that are mutually beneficial for both of you to make it work.”
And most importantly, he says, the parties need to keep the lines of communication open, they need to keep talking.
“If you don’t do that, you may get a situation where one organisation goes off on a tangent and the other organisation doesn’t understand why they are not working together in the way they had worked previously.”
Successful partnerships need more than just shared goals. They need clear lines of responsibility and control as well as constant communication.
And that can only come about when everything is worked out before hand. Like any marriage, that takes some work.
