We tend to think that companies only sell to customers. But the reality is that most economic activity actually occurs between firms. It’s a huge market and one that is rarely discussed.
But many businesses don’t know how to work with other firms effectively. Often they only find out that there is a problem months or years into the relationship. And this can prove costly. So with that said, what are the do’s and dont’s of working with other businesses?
Pay Attention To First Impressions
You’ll find out a lot about what a potential partner is like to work with during your first meeting. Pay attention to their attitude and their enthusiasm.
Often you’ll find that potential partners are overconfident in what they can deliver. Make sure that they are upfront and honest about the state of their business and be on the lookout for any times they suggest things could be improved. If there are no weaknesses, put your skeptic’s hat on and ask the tough questions.
Get A Credit Report
Running a business credit report on the other business is an important part of working together. You need to make sure that everything is out in the open. Otherwise, you risk falling into business with a firm that can’t pay its way.
Don’t demand that they produce a credit report, though. Just say that both your businesses need to file reports for the other firms’ benefit. If there is reluctance on the part of the other firm, take this as a sign that you might not want the relationship to go ahead.
Interview Your Partner
As the owner of a company, it is your duty to make sure that you act in its best interest. That means that you have to make careful decisions about which business partners you take on.
Use your first meeting with a business partner to find out as much as you can about them. You want to make sure that they’re actually competent.
Also, speak with people who have dealt with your partner before. Find out what their experiences were. They’ll be more than happy to tell you if they’ve had good experiences. And if they’ve had bad experiences, they’ll be even more delighted to tell you.
Draw Up A Partnership Deed
Before starting down the road to a happy partnership, you need to figure out the things that can go wrong. What happens for, instance, if a partner dies? What about if their business goes under? What about if somebody wants a change of career?
Having these contingencies built into a partnership deed will give you peace of mind. That’s because, more often than not, partnerships aren’t between distant companies. They’re among friends and family. And in those relationships, things can go wrong.
Find A Complementary Partnership
The best partnerships are those whose sum is greater than its parts. Find a partner who has strengths that you don’t have. But also, look for somebody who could benefit from your strengths too. What ultimately matters for driving both businesses forward is the balance between your two skill-sets.