How to Deal with Nightmare Partnerships, Collaborations & Joint Ventures
Collaboration is a key element for building your business into a successful Asset of Value. But, not every joint venture works out the way your business needs it to. Spotting, and dealing with, nightmare partnerships before they ruin your business is vital. When you find a partnership that works well, hang on to it tightly. On The Money Show with Bruce Whitfield, Pavlo Phitidis outlined what could go wrong in your joint venture, and what to watch out for:
Theft and lies
Many joint ventures are, unfortunately, often cased in a web of deceit and lies. Dishonest collaborators, with nefarious intent, seek to take over your business, rob you of your market share, or steal intellectual property from it. Larger companies often acquire smaller businesses, attaching seemingly big benefits to the deal for the smaller business. A small business looks forward to increasing its distribution network, or improving its global profile but, behind the scenes, the larger business is actively looking towards eliminating the potential threat its potential collaborator presents. This type of deceitful action often plays out in the due diligence phase of a potential acquisition, with the larger company pulling out of the deal once they’ve discovered the trade secrets or inside scoop on the smaller business.
The pressures of time and money
A collaborator who puts undue pressure on you to get started on work, before an agreement is signed, is a big red flag. A true collaborator will insist upon a robust, signed agreement before work begins, to protect their business and yours. Protect your business from this type of deceitful activity by thoroughly researching your potential collaborator, and ensuring your joint venture contract is signed before work begins. Don’t compromise and live in hope that it’ll all work out. Going in “on good faith” may lead to you losing your faith entirely, and possibly your business too.
On face value, it looks like a great deal, that seems to favour your business. But, as time passes and the project evolves, it becomes apparent that this joint venture isn’t to your benefit. An unfair deal will uncover deceitful action by your collaborator, and wound the relationship with distrust. Once distrust appears between you and your collaborator, your partnership is dead in the water. Unfair deals do not create sustainable, long-term, and mutually beneficial relationships.
Coopetition looks, on the surface, much like cooperation between competing companies. Competing businesses that cooperate are often forced into this position due to legislative requirements, supply chain requirements, or infrastructure needs. But coopetition is, most often, a fantasy that never translates into functional reality. Forced coopetition relationships mostly lead to business and reputational damage.
Misrepresented or misinterpreted expertise, capabilities & commitments
Thoroughly researching your potential partner can help to safeguard against a mismatch in expertise, capabilities, and commitments. Joint ventures often present themselves as 50/50 deals, but don’t reflect this in execution. As the project rolls out, you soon realise your partner isn’t capable of delivering on their commitment. They may be distracted by other commitments or unable to fulfil their side of the deal. You’re left compensating for your partner’s failures, to ensure your customers don’t get let down. Should this happen, look at reshaping your contract, and specifically your business’ reward for being part of this joint venture. A good partner, who is committed to seeing the deal through, will work with you to ensure that this relationship doesn’t go sour.
You might be your own worst nightmare
Your personal circumstances, age, success level, and other variables can directly impact the success or failure of your joint venture. It’s so easy to get sucked in by big promises, especially when you’re feeling desperate. Try to remain objective, but where you think you need guidance in staying on track, ask for it. Consult with a trusted peer or colleague to get a different perspective on a potential deal.
Safeguard your business’ success, by avoiding the big red flags that wave when you go into a new joint venture. At Aurik, we help you design and implement effective partnerships that help you build your business into an Asset of Value.
Tags: The Money Show