[12:46PM, 01/05/2015] +256 772 xxxxxx: There’s this dude that I am entering into a joint partnership with
[12:47PM, 01/05/2015] +256 772 xxxxxx: We agreed to start a project together
[12:47PM, 01/05/2015] +256 772 xxxxxx: We acquired the land
[12:48PM, 01/05/2015] +256 772 xxxxxx: Now we took loans to build chicken houses and start off
[12:48PM, 01/05/2015] +256 772 xxxxxx: Yesterday I found the guy cruising in a Germany made machine
The above is a true discourse a member of an Entrepreneurship WhatsApp group am subscribed to shared with us on Labour day. She had this goal of setting up a business to guarantee some side income. Conveniently, she had this friend who used to talk positively about doing something similar. Before long, they agreed to work together and set up a poultry project. This led them to borrow money to start the business and unfortunately even before they could see the first return, her partner chose to use the money borrowed from the bank to buy a top of the range car.
Without going into details as to who is to blame and what she could have one better, I want to admit that this kind of experience is common to most entrepreneurs. Infact chances are very minimal that you will find an entrepreneur who hasn’t been disappointed in a similar manner.
You might be planning to start a business or are already a going concern and you’re actively looking for partners. My advice to you is to take a step back, assess your needs and challenges, verify whether you do need partners and for what specific purpose before announcing to anyone who cares to listen.
A friend of mine that runs a Recruitment agency once told me that one of the biggest lessons he has learnt in his entrepreneurial career is never to get partners on board because of their money. Often times as an entrepreneur, you narrow down your problems to ‘lack of money’ to; expand, import equipment, acquire stock among others. This then leads you in a rush to get someone who has money and when they come on board, their demand for a quick return to their money begins to bog you down. Before you know it, conflict arises and you’re forced to close the business or borrow elsewhere to pay off this partner and reclaim your peace.
Alignment of vision is another serious challenge when partners are coming on board. Years ago, some young men I knew had started a successful Import business and were making some good money. While one of them wanted the company to grow and extend its tentacles to the entire East African region (having identified some particular products of interest), his partners begun pushing for the instant sharing of profits so that they could buy cars and other property of their choice. They lacked the patience required to re-invest the money in the business, watch it grow for a while before beginning to take out money. Despite it’s potential, the company wound up operations within a year.
Partners are not a bad addition to any business. Infact their presence helps in;
- Beefing up skill sets. Starting businesses usually cant afford to hire people to carry out the various work demands. However, someone in exchange for equity could offer to avail their exceptional skills to the business.
- Brainstorming. Without doubt, a new business requires a lot of brainstorming. Most times the way things are done especially market discovery in start-ups doesn’t follow the conventional route that most MBA lectures are likely to chart out. Having partners can help in this process and prevent a promising businesses from experiencing a still birth.
- Pooling of Finances. The typical small entrepreneur is usually devoid of cash and we all know that you can’t totally avoid spending cash in business. Having partners tends to spread out this hurdle. When we were setting up our first business, I recall a bank requiring us to open a business account with the equivalent of US$ 1000 and the business registration required close to US$ 400. As young fresh graduates with hardly much to show for financially, this was a big constraint that we only overcame by sharing the bill.
- Networks. We all don’t have access to the same networks. Business largely tends to be a game of networking. A customer can be a friend who recommends you to a friend who recommends you to a relative of theirs and the linkages grow organically. The presence of partners has the potential of doubling, tripling or even quadrupling these linkages there by offering your business greater sales opportunities.
To avoid the experience of that WhatsApp complainant, invest as much time in studying the kind of partners you want to bring on board your business. Sometimes you are better off prioritising Skills and Knowledge Contribution over Money. But above all, alignment of vision is very crucial.