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To partner or not to partner in business – Pros and Cons

Posted on: August 15th, 2016 by The Moderator 4 Comments

Kunle: It’s unbelievable number of businesses that are built on ‘trust’ alone and no paper work

Chiekezi: Yup, I’m one of them.

Kunle: You must have Underground Bullion Van. Lol.

Tobi: Well, that is impossible to do. You need to be clear on how to protect yourself though. Prepare for the worst and expect the best. Tough model, how scalable is that?

Otisi: In team sports… They’re all partners but someone gets MVP.

Chiekezi: We have more to lose, such as our friendships, than business. Like I said earlier, contracts in Nigeria to me are just useless bits of paper. For me it is about the spirit and intent of the people. Surely if you told your wife/husband to sign a pre- nup before marriage it would erode some trust?

Otisi: Agreed. Contracts all over the world. Not just Nigeria.

Emi: Yes…We have issues with people and businesses following contracts but u still need them. Not to say you won’t see HELL enforcing it but without it?

Kunle: Contracts for me are important as a reference point because even good intentions sometimes can be pressured to make wrong decisions. I’ve been burnt too many times without proper documented terms of reference. All because we are blood. Greed is a really shocking beast.

Tobi: There are different levels of partnerships, I am sure you don’t need to partner with your gateman, but you need to partner with the most important ingredients providers to your business. Be clear, be fair, be specific and get everyone’s buy-in to their commitment and rewards. Without proper documented terms, you are naked. Marriage has a document, the certificate. And there are implicit terms in that certificate.

Chiekezi: And they are very successful going by the stats in recent times? Like I said…spirit and intent.

Tobi: Going into a business without a contract with partners is like dating a girl you love without marrying her. No contract, no sin. How long are you going to date the girl for before she gets tired. 5years, 10, 20? Bottom line is, contracts define the rules of engagement and protect everyone from the human selfish nature in all of us.

Emi: If the girl has sense, she will exit the stage quickly. If not, she has entered one chance and though she will come out of it, It will be painful.

Otisi: It is all about both being ready.

 

The Octagon: A number of people fear losing their businesses to partners and especially investors. They dream up these businesses and nurture them as they would a baby. They are as a result adviced to maintain controlling shares of the company. How do you they determine what amount of equity to give out?

 

Emi: How badly do you want or need that investment? All depends on what and where you are aiming. Like Dragons Den…who the money is coming from counts.

Otisi: I think you only give what you can afford to lose. Same thing with when you lend money to people. Only give what you can afford to lose.

Tobi: You have to be clear on what you need from them and what they need from you. If you will be losing the business, make sure you get enough compensation to start something else and build that into the contract.

Kunle: Great ideas= 5%, Great ideas + right team= 55%, Great ideas+ right team + right funding= 95%. 5% is left for possibility the business might still fail.

Bankole: Lol. Lenz’s theorem of equity splits.

Kunle: Banky, I’m sure you’ve seen a ton of these our young start up guys hugging their equity and telling investors 5% and things.

Bankole: I take it you are an investor. Or interact with a lot of them.

Kunle: Yes. but I invest mainly in my own ideas. But I work a lot with start up businesses and see a lot of false expectations.

Emi: I’ve invested in a few things….Some have worked and some have not. But its always been about the people. The ideas were great but the clincher was the person/people involved. And I did not invest more than I was willing to lose.

Tobi: Ideas without resources are worthless. Think about how many ideas you’ve had and done nothing about. So you need to trade your ideas and be ready to give it up at some point. But make sure you’re giving it up for the worth of the idea. Investing is high risk, high reward. But just make sure you are well hedged in all your decisions.

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4 Responses

  1. Subomi says:

    Partnership can be beneficial or detrimental to the existence of any business, this depends on it’s basis and execution.

    It is a strategy that can be adopted for expansion or penetrating into new markets but with caution. Partnership should not be based on sentiments or emotions but strictly on individual values, vision, ethics and passion. Proper legalities have to be put in place and expectations clearly spelt out. Sometimes a business grows to a point that you definitely need to collaborate.

  2. Chidi says:

    I am faced with a partnership problem at this moment.

    I have a business prosect where my business partner lives in an environment where her vision could be darkly clouded in the nearest future. Though i faced with pressure from neighbours to get her on-board my ship.

    I have come to the conclusion to make it a short-term partnership (bear-the-risk) hire a capable and experienced partner (not-mind-cost).

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