I was just
looking at the kind of products that the Youth enterprise fund offers to youth
of this country and one of the items which was strikingly missing in their
portfolio was the need to coach and mentor youth who want to get into business
either as individuals or as partners.I have always said that offering the youth
with loans without proper training and mentorship is a recipe for a financial
disaster. Anyway, let me do what I can to bridge the gap.
The road to a business venture usually starts with an
itch that won’t go away. From the idea comes a name, a station of work, and a
start-up business. Sometimes the need for a partner to help push the business
forward will come up. It could be the skills and experience that need a
boost. It could be the finances or the networks that need a kick. In some
situations, the partnership is formed right at the start. The initiators of
such a business partnership could be college mates like Larry Page and Sergey
Brin of Google, or Bill Helwett and Dave Packard of HP. They could also be
brothers like in the Tuskys Supermarkets chain, or the Dassler brothers (Adolf
Dassler and Rudolf Dassler) of the Adidas and Puma sports footwear fame. Getting
into a partnership is one of the alluring offers that the business environment
proposes for young entrepreneurs. It is an arrangement that must be carefully
managed, yet young entrepreneurs frequently leave it to trust. There are risks
involved in being in a partnership, just as much as there are benefits. The
risks range from the normal and expected, such as occasional conflicts over
decision making, to major issues like getting thrown out of your own company.
It happens; the late Apple founder was once thrown out of a business he had
created.
So, how do you secure yourself in a partnership?
How do you keep your vision for the venture on track even when your voting
rights have gone down by virtue of taking on a partner? These are some of the
questions that any young person getting into a start-up partnership needs to
answer before opening the door to a second party. Partnerships require a lot of
balancing. The partners must know where the boundaries lie between their
relationships as friends or relatives and as business partners. If they can’t
separate the two, then there is bound to be trouble.
Usually, problems start when the profits begin to
pour in. This is particularly so when the family or peer partnership starts
with very limited capital. At that level, the partners will have little to
bicker about. For much of the time, they will focus their energies at getting
to see the business venture work out successfully. Trust and friendship drive
them. Trust has a limited role when it comes to certain matters in
business. The brother partners need a legal framework to give clear
demarcations on where each partner belongs and what they can or can’t do. To
ignore the legal aspects of the business’s administrative and ownership
structure is a fatal move for any of the partners
What of partnerships in which one individual has
the idea or the skill and other brings in the capital or the market networks?
How do you go about running your company when your partner is a
well-established business person who provided 80 per cent of the start-up
capital while you came up with the concept and made it a workable reality? Are
the two or you equal partners? Who makes the final decisions? You the founder
or the money guy?
According to a senior marketing and business
management lecturer, Dr Okonga-Wabuyabo, It is possible to quantify the idea,
the skill or the expertise. The partners will have to sit beforehand and come
up with financial figure equivalents of the non-financial aspects of the
partnership. The non-financial figure equivalents will then be compared to the
capital input of the other partner. From the comparison, a relationship ratio
can be worked out. “The agreement must be put
down in writing and a legal expert called in to oversee the signing of binding
agreements,” advises Dr Okonga. There
are common failures that experts would like you to avoid in your business
start-up partnership. They include the following:
I.
Failure to spell out the roles and responsibilities of each partner: Two
people decide to work together with each offering a distinctive service into
the venture. They both have a rough idea of what their responsibilities should
be, but not the exact scope and breadth. Soon, they will be overlapping into
the roles of each other while some things are left unattended.
II.
Failure to harmonise the long-term goals of each of the partners: The
fact that two or more individuals have entered into a partnership is not a
guarantee that they will share similar visions for the business venture. In
many cases, it happens that one partner is more forward thinking than the other
or that one has a different approach to handling the long-terms
operations. If the two approaches are not harmonized, the partners will
experience negative tensions in the way that they work.
III.
Failure to put in place a formal structure of resolving conflicts: The
possibility of conflict with your partner is real. It could be a financial
issue, an operational matter, or a technical decision. What matters is the way
the conflict is handled. It is necessary to institute a formal structure
of dealing with conflicts between partners. Absence of a legal documentation of
the partnership: This is the most overlooked yet the most important aspect of
forming partnerships. Many young entrepreneurs assume that when the partner is
a brother, a college friend or room-mate, or an older and more experienced
professional, then the chemistry is good enough. Wrong. Issues such as roles,
share ownership, capital contribution, and how to part ways must be included in
a signed agreement with guidance of a lawyer.
So before you and your partner pick that loan form from the youth
enterprise fund, ask yourself; have you sealed all the possible loopholes that
could jeopardize the existence of your startup? Have you scrutinized that
partnership deed to make sure that the interests of both partners are well
catered for. Please do. Les Brown, my favorite motivational speaker say, “Don’t
be casual with life, you will end up a casualty “
Kindly visit my Blog, http://www.smartmoneymanagers.blogspot.com and let’s talk
about money, wealth and business. Also like my Facebook page Stars of The
Future and join thousands of youth who are determined to change their lives.
