Insights on How to Avoid Bad Partnerships in Business
There are few worse feelings in business than the moment you realize the partnership you entered into isn’t working out. A wave of dread and exhaustion overcome you. How did this happen? More importantly, how can you unwind the partnership and move on with your business life?
Not every partnership is going to be a win-win. The best way to avoid wasting your time and resources on a bad partnership is to not sign the agreement in the first place. If you follow three simple rules for partnerships, it may save you from all of the negative outcomes that accompany a bad one.
Here are three suggestions for avoiding a bad partnership in business:
Do your homework – If another company approaches you about joining forces on a program or project, research them before saying yes. Look them up on Google or another search engine. What do you see on the first and second pages? Are there any negative results that you need to address with them? If applicable, check for customer reviews. If they have a Facebook page or Twitter account, how are they engaging with customers? Are there positive interactions or do you see mostly complaints? Another option is to be a prospect of your potential partner. Visit their website and/or retail location. Call their 800 number. Do their levels of customer service match or exceed your own standards?
Spell out the partnership terms – What will each partner specifically bring to the relationship in order to make it a winning combination? Write down all questions you have about the agreement. The list should include contingency planning; in other words, what happens if the partnership falls short of its goals or if something happens that changes the nature of the partnership? If you have any doubts about signing the agreement, cut to the chase as early as possible. Ask the question, “What is your specific goal or objective in forming a partnership with my company?” If their answer doesn’t align with your priorities, it’s time to move on.
Give yourself an out – In certain situations once an agreement is signed, a good partnership can quickly turn into an ugly one. What are your options? In the termination section of your agreement, build in review periods for the partnership (e.g., every three months for the first year). The agreement should be mutually beneficial. In other words, one partner should not be able to lock the other partner into an agreement that only serves one party. It is always better to err on the side of caution and say no to an opportunity rather than spending endless hours and money trying to get out of a bad business marriage.
One more important piece of advice: Always consult with an attorney to help write and review your legal agreements. You can probably build their costs into the agreement, but even if you pay their fees with your own money, signing a smart agreement today certainly beats trying to get out of a bad agreement six months from now.