This week Rick Mayo sits down with Suzanne Robb, Alloy COO and partner, to discuss what makes or breaks a business partnership. If you are considering or are already in a partnership in your fitness business, this is a must-listen!
Did you know that 70% of business partnerships fail? That’s right, most partnerships fail due to some mistakes that the partners make early on. In this episode, Rick and Suzanne talk about their business partnership and why it has worked for a long time.
How to Build a Successful Business Partnership
Choose the Right Partner
The first thing to consider is choosing the right partner. Business partners should have trust and respect for each other and have complementary skills. It’s super important to have clearly defined roles for each partner, ensuring that each person knows their duties and responsibilities to the business and what happens if they don’t perform them.
The book Rocket Fuel describes the integral roles of the Visionary and Integrator and explains how an effective relationship between the two can thrive in a business partnership. When these two people come together to share their natural talents and innate skill sets, they have the power to reach new heights for virtually any company or organization.
In our Alloy Franchise business partnership, Rick is the the crazy visionary and Suzanne is the ultimate integrator, There are some questions to ask when you are thinking about a partnership. For example, when Rick and Suzanne first discussed a business partnership, Rick had to ask questions like:
- Is it worth giving up the most valuable thing to me, which is equity in my company?
- Should I go and hire these skills from someone else for much less?
Rick suggests because 70% of partnerships fail, 70% of the time you’re going to be better off going at it alone and going out and hiring those other skills. But if the skills and personalities of the 2 people is the perfect match then you should choose the partnership route. Rick and Suzanne turned out to be the right match. Rick has the vision and ideas about where Alloy Franchise needs to go, but he is weak on the integration side. Suzanne as the integrator has the the tolerance of the wild visionary, but keeps him in check. She can take those ideas and make them come to life by hiring the right people, learning the skills, implementing the processes, operating the business, and delegating when necessary.
To choose the right person, you have to know the person, you have to know their integrity. you need the complimentary skill set, and finally, you need to have trust and respect in the person. In the fitness industry, Rick consults with owners where you see the this situation all the time: you take two entrepreneurs that are both visionaries that want to partner to open a gym. They are both visionaries, but there’s no integrator at all. Things don’t get done and the business relationship falls apart.
Create a Formal Partnership Agreement
Once the right people are chosen for the partnership, a formal partnership operating agreement is created. The partner roles are detailed, and expectations are set for each partner’s performance. The agreement clearly defines the nature of the partnership, including the exit plans, partner buyouts, and other scenarios that may crop up.
Examining the fitness partnership again, we saw they both share the same roles and the same skill set, They both have a million visionary ideas, but nothing is getting done, Now, if you don’t have clearly defined roles as well, then animosity develops. In this scenario, both were doing marketing and acquisition, both were doing sales, both were coaching the staff and it becomes a weird competition. There is a psychology that surrounds the partners like with overvaluing your contribution and undervaluing the other partner’s contribution.
Listen in to this episode to learn more about business partnerships and how to do them right from the beginning by choosing the right person, trusting and respecting in the person, knowing their background and capabilities, and then clearly defining partner roles in a formal operating agreement.
- Why 70% of business partnerships fail (01:14)
- How to choose the right business partner (02:29)
- Why it’s very important to have clearly defined roles in a partnership (07:09)
- Why you need a partnership agreement (09:45)
- Business partners should have complementary skills sets (12:10)
- Why it’s a smart thing to have a formal operating agreement (13:59)
- Planning a partnership exit plan (19:00)
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Mentioned in this episode
Suzanne Robb, COO of Alloy Personal Training