By Viktor Andrukhiv, Co-founder of Fibermix and Savex Minerals
In today’s business world, partnerships are one of the most popular business models. The most famous giant companies, such as Google, Apple, and Microsoft, were founded in partnerships between two or more people. According to a Harvard Business Review study, 94% of tech executives consider innovation partnerships to be a key component of their strategic model.
Entrepreneurs are looking for opportunities to join forces to create competitive companies together, share risks and leverage diverse resources. These partnerships often facilitate efficient scaling and growth, even during periods of economic downturn.
In Ukraine, businesses encounter various challenges, including a scarcity of capital, intense competition, and rapidly changing markets. During times of war and crisis, partnerships can serve as a crucial lifeline for entrepreneurs and, by extension, for the broader economy.
The advantages of business partnerships
- Combination of competencies and experience. It is impossible for a single person to be an expert in all areas; one partner may be strong in strategic planning, while the other may be strong in finance or marketing. For example, the success of Apple was made possible by Steve Jobs being an ideologist and leader, and Steve Wozniak being a technical genius.
- Sharing of financial investments and risks. Partnerships allow not only to share costs but also to distribute responsibility for the results. This is especially beneficial in Ukraine, where many entrepreneurs face challenges.
- Scalability: A company with multiple co-founders has greater potential for growth, market entry and attracting additional investment.
- Flexibility in decision-making: Partners can distribute management functions among themselves, enabling quicker response to market challenges and business adaptation to changes.
- Ability to start new businesses: Depending on the division of responsibilities, a business partnership can free up time for launching new projects.
Conditions for a successful business partnership
Many partnerships fail because of misplaced expectations or a lack of clear agreements at the outset. For a business partnership to be successful, it is important to adhere to a number of principles.
A shared vision of development. It is important that partners understand where they are going and are willing to work towards a common goal. Before you start, discuss the possible future of your business together, visit each other’s businesses, assess the atmosphere in the teams and talk to the team.
Clearly define roles. If everyone knows their responsibilities, it will help avoid conflict and increase management efficiency.
Trust and predictability. For a partnership to work, you need to be open about your strengths as well as your weaknesses.
Partnership agreement. At the start of the partnership, it is important to set out all the key points: shares in the business, decision-making mechanisms, exit procedures and profit sharing.
The biggest mistakes in business partnerships
Business partnerships come with challenges as well as benefits. Along the way, it is easy to make mistakes that can be critical to your business and even lead to bankruptcy. When facing the threat of bankruptcy due to partnership disputes, seeking counsel from experienced bankruptcy law attorneys is crucial.
Idealising the partner. Entrepreneurs often perceive a potential partner only in terms of its strengths, without considering possible risks.
Lack of a partnership agreement. We agreed in words’ is one of the most common reasons for business failure.
Uneven workload. If one partner does much more work than the other, this can lead to conflict and imbalance.
Unwillingness to discuss important issues. At the start of the relationship, it is important to discuss both the development plan and the goals the business should be moving towards. And then regularly review your vision with your partners. This is important to ensure that you are moving towards a common goal.
Does every entrepreneur need a partner? NO!
If you can do everything on your own, or if your business does not require additional expertise, it may be better to hire competent people instead of looking for a partner. Partnerships are not suitable for entrepreneurs who seek complete control, are not inclined to compromise and open communication.
Business partnerships are a powerful tool for business development, but their effectiveness depends on the right choice of partner, clear agreements and a shared vision of the future. In Ukraine, entrepreneurs are increasingly choosing the partnership model of doing business because it makes it easier to overcome challenges. It is therefore quite resilient in times of war and crisis.
Successful partnerships are built on trust, transparency and a willingness to work towards a common outcome. If you are considering this model for your business, choose your partner carefully, be clear about all the key points in the agreement and be prepared for flexible management.
Further Reading
