Category Archives: Business Partners

Does luck play a part in business success?

Business luckGiven that today is Friday the 13th I thought it interesting to look at the role luck plays in business success.

Firstly it would be wrong to say that luck, or being in the right place at the right time is non-existent – it does happen.  Think of those who bought property in places like London some time ago, never thinking that prices would sky-rocket.

Perhaps simply the luck of meeting just the partner, Investor or contact that you need at absolutely the right time for your fledgling business.

Even starting a new business whilst unbeknownst to you, significant market and trend changes mean that it suddenly becomes a roaring success

However, as the writer Nesta Jojoe Erskine has said, “You don’t get lucky while sitting in the sofa with arms crossed doing nothing. You can be lucky only when you are prepared.”

There is strong evidence that the more you put yourself “out there”, make as many contacts as you can and take positive action, the greater the likelihood of having luck find you.

I recently was reminded of the famous quote by Jack Nicklaus, “The more I practice, the luckier I get”, and the similar “The harder I work, the luckier I get” by Samuel Goldwyn.

Yes sometimes fortune smiles unexpectedly, but most successful people have not sat around waiting for that to happen, they have put themselves in a position through planning and endeavour to allow that lucky break to happen.

See also: Why Businesses don’t Get Started

 

The Easiest Way to Sack your Boss!

Ideas to have your own businessVenturing out on your own can be a daunting task. Your nine to five brings with it a certain security net, however, the only way to achieve your dream is to take the leap and become your own boss!

In order to make sure that you are successful in this endeavour, though, it is important that you find the option that is right for you. Because, despite what you may think, there is more than one way to become a successful entrepreneur.

Below, we take a look at some of the simplest ways and give you tips on how to make sure that your journey to entrepreneurship is a positive one.

1.    Start a business from scratch

This is what most people will think of when they think about becoming an entrepreneur. There are a lot of risks involved in starting a business from a scratch, however, if you have an idea that you have confidence in and you are willing to put in the work, this is probably the best option for you.

The most difficult choice to make will be when to hand in your notice and throw yourself fully behind your idea. Many entrepreneurs try to keep their day job as long as possible in the beginning stages of their business so that they have a salary while they get their business off the ground.

You need to be realistic about your financial situation. How much will you need to start your own business and how long before you are realistically able to pay yourself a salary?

2.    Buy a business

Buying a business is another way to go about setting out on your own and being your own boss. The advantage of this is that you can see if the business has a proven track record.

This is very handy when you go to the bank to ask them for a loan. Proven financials will give far more of a chance of getting the money that you need to purchase the business.

For example, if you are looking to buy a pub, buying an existing one will come with an already established customer base and supplier relationships. You will just need to choose the right one to buy.

3.    Find a partner

Going into business can be made a lot easier if you’re able to find the right person to partner up with. Having a partner can double your resources in terms of skills and capital!

It is, however, vital that you find the right person to partner up with. The wrong partnership can turn sour so spend time making sure that you have the same goals and ideals.

4.    Find investors

The financial pressure of starting a business can be the single biggest reason to stop you sacking your boss. There are, however, a lot of financing options that are not necessarily the traditional routes of looking to banks for loans.

Why not look to angel investors to help you get your business going? If you have the right idea and you are willing to put in the time, there may be the right investor out there who will believe in your vision.

If you are able to carefully chose the right path to becoming your boss, there is every possibility that you can enjoy the process. Every future boss must find the option that is right for them and their circumstances. If you are able to do this, you’ll be on your way to success!

 

By Matthew Hernon: Account Manager at Dynamis looking after Business Transfer Agents and Franchises across BusinessesForSale.com and FranchiseSales.com

 

 

How to choose the best business partner

Business Partners

Having a business partner that you can bounce ideas off, share the work load and motivate each other is a great help to a young business. 

They should also bring complimentary skills and additional expertise that allows the business to be driven forward faster.

 

 

Sounds perfect doesn’t it? Yet even with all of those boxes ticked, partnerships and businesses can flounder. Here’s how to make sure that your business gets the best from the partners:

 

  1. Mutual respect & compatibility – many businesses have partners who may not want to be best friends, but they do need to get on with each other. You will spend a lot of time together and it should be enjoyable or at the least, not dreaded.
  2. Attitude and work ethics – it often the case that one partner is slightly more flamboyant / extrovert and others perhaps more reserved or technical / financial, but all should share the same attitude towards work.
  3. Company mission & vision – if the partners don’t agree on the basics of what the company is in business to do and where they eventually wish it to end up, then if not at first, certainly later there will be a fallout.
  4. Long term personal vision – coupled to the above, individuals may have differing personal goals. If one is looking for a comfortable lifestyle business and the other seeing it growing to corporate status, or perhaps one partner sees it as a short-term venture, the other as a commitment for life, it’s easy to see how harmful disagreements could happen.
  5. Defining areas of responsibility – stepping on each other’s toes is not only duplicating activity, but at worst will provoke great arguments. It’s easily avoided by defining who is responsible for what and shares the work according to preference and expertise. Best to do right at the start.

Putting together a partnership agreement (here are some agreement tips) will allow you to explore those areas and in documenting the way you will work together avoids misunderstanding.

If in doing so if you realise that there are major differences of expectation you can either work through them, or take the opportunity early to accept that the partnership is not meant to be.

 

 

Top Tips for a Successful Start-up

business startup tipsOver the years I’ve talked to many entrepreneurs who started with a great concept and high energy yet failed to launch a successful business.

I’ve also seen people who only had modest ideas and yet went on to establish large profitable companies.

 

 

These are my conclusions and top tips for a successful start-up: 

1.  Know your market. Many of the entrepreneurs that failed had dashed headlong into launching their business without having done the spadework of testing the market’s acceptance of their idea.

The ones that succeeded had worked out a practical marketing plan, knowing how they were going sell the product or service to an identified group of customers.

I’ve written on this before, see Marketing Planning and Marketing Ideas

2. Start with a co-founder or partner. Almost all the successful businesses had a partner.

Bill Gates, Steve Jobs and even Richard Branson had co-founders. It takes some of the burden from you, inspires action and gives another person to bounce ideas off. See Should You Have a Business Partner?

But do make sure you put the business partnership in writing .

3. Start lean. In the early days those that were most successful focused their funds only on the areas that would make a difference.

No big cars or designer offices. The founders worked for minimum wages, ploughing all the money back into the business.

4. Measure and keep track of how you are doing. Knowing your costs vs sales and the timing of funds in and out is a necessity. Some that failed were profitable companies but sank because they underestimated the importance of their cash flow.

It doesn’t have to be difficult or expensive, use online accounting software like QuickBooks which is ideal for the small business. Because it’s online you are not trapped in the office to use it, vital when it’s you doing many of the jobs in the business and dashing around.

Nobly have a good reference for what to look for and have rated the best accounting software that you may want explore.

5. Use customer feedback. You won’t get everything right first time. Those that reacted quickly to customer feedback made the biggest strides. Also, in engaging with your customers you build loyalty and repeat sales.

In fact customer service is a great differentiator for you. Many that failed were somewhat arrogant in their customer dealings. Have a look at rather an old article now, but still relevant Provide a Better Service Than Your Competitors .

Yes growing a business is hard work, but also fun. With a little bit of foresight and doing the right things the business will blossom and provide you with enjoyment (and reward) for many years to come.

 

Do I need a Business Partner?

Business Partners can be a help to every business from start-ups to established companies. A Business Partner will:

  1. Bring additional or complementary skills
  2. Have ideas that when added to your own create new opportunities
  3. Provide support and motivation when times are tough
  4. Share the workload
  5. May have contacts and some funding to grow the business

When taking on a business partner it is sensible to have a business agreement so that there are no surprises and it gives a chance to ensure that both partners are clear about the direction the business is going. See: Business Partner Agreement help

I gave some tips on forming a business partnership last year which is still up to date, have a look at How to Avoid Business Partner pitfalls

 

Should you have a Business Partner?

Ben and Jerry Business Partners

Business Partners – Ben and Jerry

Running a business is a lot easier when you have a business partner to share the highs and lows, as well as all the work.

You may of course have all the skills needed for your business, but have you the time? Or are there some areas that you love doing and excel at, but would rather have someone who is an expert doing those areas you don’t enjoy?

 

Then you need a business partner.

Hang on, why not just hire someone, surely that’s faster and there is less commitment? Well yes, in many established businesses taking on an employee is the right thing to do, but if you are starting out or a small business, then having a Business Partner that can share the burdens, rather than just an employee that needs paying every month is the way to go.

Business Partner advantages:

  • Fully motivated
  • Someone to bounce ideas off
  • May bring additional funding into the business
  • Their payment can be linked to the business profitability
  • Can shoulder issues and share the responsibilities
  • Will bring skill-sets that you may not have
  • More will get done – having a Business Partner will more than double your efforts as each drives and encourages the other forward

When taking on a Business Partner it’s best to put together a Business Partner agreement (see Business Partner Agreements ).

Running a business by yourself is tough, almost all successful businesses had 2 or more Business Partners, even if one of them took on the role of media frontman.

 

 

Business Partner pitfalls and how to avoid!

Business Partners TalkingHaving a Business Partner can be a great benefit. They bring additional skills and resources, you also have someone to bounce ideas off and to share the stress & risk.

But in some cases the partnership can go wrong. Occasionally it is because there was not enough due-diligence in checking the background of the potential partner. Simple Companies House checks will reveal past company directorships and you can ask for references.

However most times where a business partnership ends it is because the partners no longer get along. This can result from incompatible personalities, differences in the direction that the business should be taking, or conflicting work styles. In many cases this can be avoided by:

  1. At the beginning of a partnership you should establish that you share the same vision for the business.
  2. Talk about how you and your partners wish to work on the business. Is the way of working compatible? Can you foresee any issues; for example one partner may be happy working late, whereas the other may prefer to finish at regular times. Resentment or guilt can build up from such differences.
  3. Have clearly defined individual responsibilities. Ideally fitting complementary skills.
  4. Ensure that the partners have common values and ethics.
  5. Maintain respect for each other and trust that each is doing their best for the business.
  6. Communicate. Lack of communication can generate misunderstanding, relationship difficulties and concern. Rarely is it possible to over-communicate.

Don’t let the pressures of running day to day operations prevent talking regularly to your partners, not just on immediate activity. Take time each month to review progress against targets and discuss how each is doing, checking if support is needed by one partner. Is the vision and direction still being maintained and shared?

Finally build trust with each other by doing what you say you will do. If you can’t for some reason, let your partner know ahead of the deadline.

 

 

What Type of Business Partnership Should I have?

Business Partners

Business Partners

Every enterprise that isn’t a sole trader will have people who are working together as partners to drive that business towards its goals.

This can be in a business that is registered as a legal partnership (see below), fellow directors of a company, or at its most simple just 2 people working together with no legal entity formed. Let’s look at the most common types of partnerships:

 

 

1. A General Partnership:

Where 2 or more people work together sharing responsibilities without a separate legal entity being formed. Profits and liabilities are shared. The least complicated, however it does mean each individual is personally liable for any debts that result from the business.

Although not a legally registered entity, HMRC must be told that you are working as a Partnership with someone and the income is included in your personal self-assessment.

2. Limited Partnership (LP):

At least one, or more, partners must take full responsibility and liability for the business and are known as a General Partner, similar to above. These must also be the only ones that take the management decisions.

Others can join as Limited Partners by putting capital into the business and their liability is limited to the amount they have put in. HMRC must be told and the partnership registered with Companies House. Each partner includes their portion of the profits within their own personal taxation.

This is a popular entity for Venture Capital companies, where there is a management team of General Partners, with other Limited Partners who invest funds into the portfolio.

3. Limited Liability Partnership (LLP):

For most partnership businesses this is a good choice, since it protects the individual partners against the business liabilities. You’ll need at least 2 “designated” members of the partnership who take on the HMRC and Companies House responsibility.

Other partners are termed “ordinary” members of the partnership. Again each is taxed on their income from the partnership as individuals.

Professional services such as solicitors sometimes prefer this legal entity for the flexibility it provides in bringing in new partners and altering profit sharing arrangements.

4. Directors of a Company:

Although not normally thought of as a ‘partnership’ in the legal sense, I include this because many companies will take on a new business partner and make them a director of the company. In this regard it is the most common “business partnership” and has the attraction of being well understood, protects personal liability and can give tax flexibility.

 

If starting a new business you have the opportunity to chose a format that works well for you. So it’s a good idea to check with your accountant on which legal entity is best for your personal circumstances.

 

The difference between a Business Partner and an Investor

2 Business Partners

2 Business Partners – Bill Hewlett and Dave Packard

Company Partners provide access to both Business Partners and Investors so what is the difference and when would you have one but not the other?

Certainly an Investor is a business partner of sorts and can bring many of the benefits of a business partner. A Business Partner could in some circumstances end up investing in the business, so here is my take on the similarities and difference:

 

 

Business Partner

  • Hands-on
  • Brings additional, complementary skills
  • Sometimes useful contacts
  • Will share in the profits of the business
  • Likely to own some share of the business, or be given the opportunity to buy or earn shares
  • More commitment and “skin in the game” than just an employee
  • Primarily brought in for their expertise and ability to add value when working in the company

Investor

  • May be hands-on, but often not.
  •  Skill set frequently is in business planning, finance and strategic direction
  • Normally valuable contacts are available
  • Will share in the profits of the business
  • Injection of funds (to be used to grow the business) in exchange for equity in that business
  • Doesn’t want to run the company, but will expect involvement in major decisions and report on progress
  • Primarily brought in to provide funds, advice and contacts

If you need another pair of hands with essential expertise go for a Business Partner, if you primarily require funds and contacts, go for a Investor. Both will provide a sounding board and be able to provide advice.

 

Don’t make this mistake in your first conversation with a potential business partner or Investor

Investor listeningYou don’t know when you might bump into or be talking to a useful contact, business partner or even potential Investor. This first conversation is your best chance to impress and could determine whether you get a second more detailed conversation or meeting.

So grab the chance to explain your business, or idea, in a way that is clear and compelling.

Sounds easy, yet this is where otherwise excellent entrepreneurs make a big mistake. They are not prepared and simply ramble on in every direction. Think about it, can you tell me about your concept in a way that I will really understand and allow me to be excited about joining you as a business partner or Investor?

Some entrepreneurs are very good at this and you may be one of them, but the majority of people I talk to make a terrible hash of it. When they finish I am none the wiser and couldn’t honestly recommend them to the business partners and Investors I meet.

You’ve heard of the now clichéd Elevator Pitch where you describe your business in the time it takes to travel up in an elevator to a prospective customer/Investor. Well that concept came about because it was a useful way of visualising what was needed. So don’t be too quick in dismissing it as old hat.

Here are my top tips for engaging interest in your business when you first talk to a potential business partner or Investor. This is not an investment pitch or a presentation, but simply an opportunity for a quick conversation with a potential ally in growing your business.

1. Think about the situation and how much detail you need to go into. Is it a chance encounter with someone at an event, or a telephone call with a business angel where you have time to prepare?

2. Don’t start spouting words at machine gun pace, never giving pause for questions, or even noticing that you’re on entirely the wrong track of what was asked. Use your empathy and listen. Use the feedback you are getting, visually or by asking “is that what you meant”, “does that make sense” (if on the telephone).

3. Prepare an explanation of your business. Write it down and then practice saying it out loud. Writing the explanation down forces you to think about it and ensures it flows logically. After you have talked to someone about your business, reflect on how that went and make adjustments. You’d be surprised how many people don’t.

4. Have 2 versions – one that may take just 30 seconds which gives the whole concept in a nutshell and a second version that allows a bit more detail taking a few minutes.

5. This is what potential business partners and Investors want to hear:

  • Who you are, your experience and your knowledge relevant to making the business a success.
  • The market area that you are in and the size & potential of that market.
  • What your company/business/project/idea does. Clearly – so that there is no misunderstanding or confusion. This needs trying out on people who have never heard of your activity.
  • What problem does your business solve for clients/customers? What advantage does it give them? What desire or aspiration does it allow?
  • What is your uniqueness, how do you compare to your competition?

The listener should now have a initial understanding of you, your business potential and the market, if it is appropriate you should also add what you are looking for in order to grow that business. A Partner, a Mentor, an Investor, contacts, sales help or whichever you need.

Remember, experienced business people and especially Investors have heard it all before, don’t boast, don’t over-hype, be professional and have a couple statistics in mind to throw in that supports your claims – it will impress.

With good planning and thought you can make a favourable impression with whoever you meet – you never know where it may lead.