When multiple people or organizations bring their unique strengths together the results are often greater than what either could have achieved alone. The very best business partnerships have catapulted careers and fueled business growth. Partnership between brands can help reach new audiences, and professional partnerships form a relationship that pushes both sides to achieve more.
That’s not to say forming a partnership is without risk. While we can celebrate the best partnerships among us, there are countless examples of joint ventures that just didn’t turn out so well. Knowing this, it’s important to consider partnerships carefully before making them official. This means doing your research before signing on the dotted line. You may not be able to predict the future, but you can look to the past to see if partnership is doomed from the start. When you start researching, here are certain red flags that merit deeper consideration.
Legal Woes Might Be a Partnership No-No
Entering into a partnership is a lot like marriage. In no small part, you’re forging your destinies and tying your reputation to theirs. Their successes become the new team’s successes, but their troubles might quickly become your nightmare.
Discovering that a partner has a complicated legal history—especially if this wasn’t previously disclosed—is a sign to tap the brakes before progressing a partnership forward. A long series of lawsuits, significant past judgements, liens, bankruptcies and criminal histories could all potentially point to a history of unethical behavior, poor judgement or blatant disregard for the law. At the very least, this sort of finding merits a conversation with a potential partner before you link your business to their past.
Don’t Let Their Conflicts Damage Your Interests
It’s not uncommon for successful business leaders to have multiple interests. Even corporate entities can be invested in a diverse mix of ventures outside of their primary industry. Executives often serve on many outside boards of directors. A partner with many interests isn’t a bad thing, so long as it doesn’t pose a conflict with your joint goals.
Conflicts of interest create situations where bias can cloud business judgement. Even if competing interests somehow didn’t affect a potential partner’s judgment, the appearance of a conflict can be just as bad. Those on the outside can see this as reason to lose faith or question their motives. This creates a cloud that can dampen any potential success a partnership might yield
Carefully research where a potential partner’s interests may compete with the goals you’ve laid out, and, when conflicts exist, move forward with complete transparency.
Guard Your Reputation Against Potential Threats
When it comes to partnerships, when they look bad, you look bad. Intentional or not, going into business with another person or group constitutes a tacit endorsement that can bolster or hinder your reputation.
Reputation impacts all parts of your business. A bad reputation can cause customers, employees, vendors and future partners to turn away. That’s why it’s so important that you don’t let your hard-earned reputation be tarnished by an ill-vetted partner.
The list of reputational risk factors is as diverse as it is ever-changing. A history of negative media coverage, poor corporate citizenship and a past negative or offensive social media comments can all resurface at any moment, creating the chance for a public relations crisis. Don’t wait to be caught off guard: research potential reputational risks well before making a partnership official.
Any good partnership will rely on open and honest communication, and research is the first step toward establishing the trust that makes it happen. In the early stages this type of research can, at best, validate optimism for a new joint-venture. At worst, it can save you from a potential disaster in the future. Either way, entering into a partnership without research is a risk not worth taking.