Think back to your childhood for a moment. If you are like me, you probably disagreed with your siblings or parents. Sometimes our disagreements would digress to the point of, “But you said … ” in an effort to try to win an argument. Unfortunately, I rarely, if ever, won arguments with my parents because it was their word over mine.
In families, hierarchy and rules are often clear. This is not the case in business. We need to choose our partners strategically and develop rules to benefit both parties. When chosen properly, strong strategic partners go a long way in growing a company.
But many companies and entrepreneurs still use the “but you said” argument when partnerships go awry. People’s interests and priorities evolve over time and many good business ideas die because one partner doesn’t live up to his or her commitment. Unless a formalized agreement is in place, individual company priorities will take precedence over any informal “handshake” agreements, effectively derailing projects and companies.
Choosing the right partner
At the Akron Global Business Accelerator, I work with startups and early-stage companies to help them develop strategic partnerships. Here are my top tips about choosing the right partner:
- Past behavior is the best predictor of future performance. Regardless of what is said, potential partners will behave much as they did in previous partnerships.
- Know the current and past relationships of potential partners. Talk to some of their past strategic partners to ensure their account of partnership successes can be verified.
- Don’t let partners take advantage of you. Some companies may treat smaller companies as a low priority, which can lead to cash flow, legal, supply chain, R&D and other major concerns.
- Make sure your partner responds to challenges on your partnership structure, showing genuine empathy for your position in negotiation and demonstrating flexibility. “Digging in” on smaller issues can be a tip-off to confrontations ahead.
- Hire a good attorney who represents your interests exclusively. This is critical, especially when drawing up agreements.
- Put all agreements in writing. If you choose the right partner, the agreement will never have to be pulled out of the file drawer. If you don’t, a well-written agreement will protect you.
Formalized strategic partnerships are critical for every business. While I admit there are times I wish I was a kid again — especially during the summer — I am glad I have learned the value of vetting potential business partners and the importance of having written agreements.
“But you said … ” may work on the playground or in an informal setting. But in business, it is just leaving your company open to problems and risks you really don’t need or want. ●
Anthony Margida is CEO of Akron Global Business Accelerator, a National Business Incubator Association Innovation Award winner. AGBA currently serves 38 technology-based startups and has created 640 jobs for Northeastern Ohio in the last five years.
Connect with Margida on LinkedIn, or visit www.akronaccelerator.com for more information.
