Tag Archives: Business Partners

What Type of Business Partnership Should I have?

Business Partners

Every enterprise that isn’t a sole trader will have people who are working together as partners to drive that business towards its goals.

This can be in a business that is registered as a legal partnership (see below), fellow directors of a company, or at its most simple just 2 people working together with no legal entity formed. Let’s look at the most common types of partnerships:

1. A General Partnership:

Where 2 or more people work together sharing responsibilities without a separate legal entity being formed. Profits and liabilities are shared. The least complicated, however it does mean each individual is personally liable for any debts that result from the business.

Although not a legally registered entity, HMRC must be told that you are working as a Partnership with someone and the income is included in your personal self-assessment.

2. Limited Partnership (LP):

At least one, or more, partners must take full responsibility and liability for the business and are known as a General Partner, similar to above. These must also be the only ones that take the management decisions.

Others can join as Limited Partners by putting capital into the business and their liability is limited to the amount they have put in. HMRC must be told and the partnership registered with Companies House. Each partner includes their portion of the profits within their own personal taxation.

This is a popular entity for Venture Capital companies, where there is a management team of General Partners, with other Limited Partners who invest funds into the portfolio.

3. Limited Liability Partnership (LLP):

For most partnership businesses this is a good choice, since it protects the individual partners against the business liabilities. You’ll need at least 2 “designated” members of the partnership who take on the HMRC and Companies House responsibility.

Other partners are termed “ordinary” members of the partnership. Again each is taxed on their income from the partnership as individuals.

Professional services such as solicitors sometimes prefer this legal entity for the flexibility it provides in bringing in new partners and altering profit sharing arrangements.

4. Directors of a Company:

Although not normally thought of as a ‘partnership’ in the legal sense, I include this because many companies will take on a new business partner and make them a director of the company. In this regard it is the most common “business partnership” and has the attraction of being well understood, protects personal liability and can give tax flexibility.

If starting a new business you have the opportunity to chose a format that works well for you. So it’s a good idea to check with your accountant on which legal entity is best for your personal circumstances.

The difference between a Business Partner and an Investor

2 Business Partners – Bill Hewlett and Dave Packard

Company Partners provide access to both Business Partners and Investors so what is the difference and when would you have one but not the other?

Certainly an Investor is a business partner of sorts and can bring many of the benefits of a business partner. A Business Partner could in some circumstances end up investing in the business, so here is my take on the similarities and difference:

Business Partner

Hands-on
Brings additional, complementary skills
Sometimes useful contacts
Will share in the profits of the business
Likely to own some share of the business, or be given the opportunity to buy or earn shares
More commitment and “skin in the game” than just an employee
Primarily brought in for their expertise and ability to add value when working in the company

Investor

May be hands-on, but often not.
Skill set frequently is in business planning, finance and strategic direction
Normally valuable contacts are available
Will share in the profits of the business
Injection of funds (to be used to grow the business) in exchange for equity in that business
Doesn’t want to run the company, but will expect involvement in major decisions and report on progress
Primarily brought in to provide funds, advice and contacts

If you need another pair of hands with essential expertise go for a Business Partner, if you primarily require funds and contacts, go for a Investor. Both will provide a sounding board and be able to provide advice.

Don’t make this mistake in your first conversation with a potential business partner or Investor

Investor listening You don’t know when you might bump into or be talking to a useful contact, business partner or even potential Investor. This first conversation is your best chance to impress and could determine whether you get a second more detailed conversation or meeting.

So grab the chance to explain your business, or idea, in a way that is clear and compelling.

Sounds easy, yet this is where otherwise excellent entrepreneurs make a big mistake. They are not prepared and simply ramble on in every direction. Think about it, can you tell me about your concept in a way that I will really understand and allow me to be excited about joining you as a business partner or Investor?

Some entrepreneurs are very good at this and you may be one of them, but the majority of people I talk to make a terrible hash of it. When they finish I am none the wiser and couldn’t honestly recommend them to the business partners and Investors I meet.

You’ve heard of the now clichéd Elevator Pitch where you describe your business in the time it takes to travel up in an elevator to a prospective customer/Investor. Well that concept came about because it was a useful way of visualising what was needed. So don’t be too quick in dismissing it as old hat.

Here are my top tips for engaging interest in your business when you first talk to a potential business partner or Investor. This is not an investment pitch or a presentation, but simply an opportunity for a quick conversation with a potential ally in growing your business.

1. Think about the situation and how much detail you need to go into. Is it a chance encounter with someone at an event, or a telephone call with a business angel where you have time to prepare?

2. Don’t start spouting words at machine gun pace, never giving pause for questions, or even noticing that you’re on entirely the wrong track of what was asked. Use your empathy and listen. Use the feedback you are getting, visually or by asking “is that what you meant”, “does that make sense” (if on the telephone).

3. Prepare an explanation of your business. Write it down and then practice saying it out loud. Writing the explanation down forces you to think about it and ensures it flows logically. After you have talked to someone about your business, reflect on how that went and make adjustments. You’d be surprised how many people don’t.

4. Have 2 versions – one that may take just 30 seconds which gives the whole concept in a nutshell and a second version that allows a bit more detail taking a few minutes.

5. This is what potential business partners and Investors want to hear:

Who you are, your experience and your knowledge relevant to making the business a success.
The market area that you are in and the size & potential of that market.
What your company/business/project/idea does. Clearly – so that there is no misunderstanding or confusion. This needs trying out on people who have never heard of your activity.
What problem does your business solve for clients/customers? What advantage does it give them? What desire or aspiration does it allow?
What is your uniqueness, how do you compare to your competition?

The listener should now have a initial understanding of you, your business potential and the market, if it is appropriate you should also add what you are looking for in order to grow that business. A Partner, a Mentor, an Investor, contacts, sales help or whichever you need.

Remember, experienced business people and especially Investors have heard it all before, don’t boast, don’t over-hype, be professional and have a couple statistics in mind to throw in that supports your claims – it will impress.

With good planning and thought you can make a favourable impression with whoever you meet – you never know where it may lead.

5 ways to be a success this year

1. Work on your brand and image.

Success breeds success and perception is reality. The reason these truisms exist is that they are, well…. true.

What do people think when you communicate with them? Do they want to be a part (either as a customer or an Investor) of your successful and dynamic business? Perhaps you’re not quite there yet, but do all you can to give that image to people.

Branding is often just thought of as logos and letter-heads, a catchy tag-line and corporate colours. It’s easy to get bogged down in working on these and miss a couple quicker paybacks of having your own company email address (it’s not professional for a business to be using gmail/Hotmail) and a simple but high quality business card (the cheap ones are not worth having).

Most businesses now have a website, they’re inexpensive to produce and can instantly be a way of conveying your brand and image, so think about having one well designed. A local web designer can do a far better job than the free sites that come with purchasing a domain name.

For established companies, rethink how you are perceived. Ask customers and importantly potential customers what they think of when your name is mentioned. What do they like, what would they change? Get a pair of fresh eyes to look at you.

2. Give better customer service than your competitors.

Customer Service is now being seen as the number one differentiator in this era of everyone having very competitive pricing.

Good customer service needs to be built into the image of your company; it is a positive brand characteristic and will pay back with repeat business and recommendations.

It also needs to be built into the fabric of your business, from the attitude of yourself and your staff, to the systems that you put in place to support it.

Think of how John Lewis continues to do well, while others fail. Amazon has a great customer service for an on-line company. They’ve made good service a part of who they are.

3. Get help from your peers.

There are people who have already overcome the same problems you have, or may have contacts that you need, or insights into what works and what doesn’t. They can brainstorm ideas and help with strategies.

Where do you find them and isn’t it worrying to give potential competitors information on your business?

This is where you have to choose the make-up of your group wisely; there will be entrepreneurs and businesses that are not competitors but have the same issues as yourself. You can also sign an agreement where you keep each other’s information confidential.

As to where; Mastermind groups (look it up on Google), Network events, local Chambers of Commerce, Small Business Federation, and even banks run such activities for clients. There are also commercially run groups, often catering for executive level participants which provide well organised meetings and coaching, although they do tend to charge quite high membership fees. You could also set up your own group. If you do so, lay out some agreed upon rules.

4. 90% of success is turning up.

Do it. Yes stop prevaricating and do it. Dreaming of starting a business? Thinking that you should look at your costs? Wondering if you should do more PR or marketing? Just do it.

“I have never met the person who went out to do what they really dreamed of, and then regretted it, regardless of whether they later succeeded or failed.
“But I have met many people in later life who wished they had taken more risks to follow their dreams” – Simon Woodruffe (Yo! Sushi)

General George S. Patton: “a good plan violently executed now will be better than a perfect plan next week.”

5. Employ the best people that you can find.

This has constantly been the most given advice when successful entrepreneurs have been asked about lessons learnt.

Now if you are the sole owner of a young business, struggling to cope and having to do everything yourself, you may think that any warm body would be a plus.

However, even then it’s worth getting the best that you can afford at the time, which means investing some time in your choice.

“When picking your team, work with people you like, and give them massive respect.” – Simon Woodruffe. But I would be careful taking on friends, they may not be the best choice for skills and what will happen if goes wrong.

There are of course many more things that you can do to make this the year when your business takes off, but it’s better to focus on a few actions and make them happen, than a lot of possibilities that never get done.

1000 Business Ideas you can start

I’m always saying that ideas are 10 a penny, it’s getting off your backside and doing it (and doing it well) that counts.

But are there really that many new business ideas about? I decided to have a look. Not all of them would in fact prove commercial and some when you examine them, are actually old ideas brought up-to-date, but there are thousands of business ideas laying around waiting for someone to pick them up.

A few words of advice when looking at business ideas:

Never pay anyone for a get rich quick scheme – If it’s too good to be true….
Watch out for “work from home” businesses that will cost up front for samples or products but never make you enough money to live on
A lot of ideas that are talked about have never been tested and might not work

However, you may get inspiration and your own business idea from looking through the lists. Once you’ve got the idea you must then of course think through the market and how it will in practice work. See why ideas don’t work or get investment.

Finally, do it. Yes, actually do it.

5 Places to get Business Ideas:

Palo Alto provide 500+ sample business plans. There may be one there that you could make your own.
Scott Barlow’s ideas are very interesting and with some modification could lead you to an innovative business.
Franchises – these provide not only a ready-made source of proven businesses to get in to (for a fee to the Franchisor) but if you look through the listings you may think that there are a few there that you could start yourself from scratch.
You could buy an established business of course, but since we are focusing on getting ideas for a business, you could use the listings of businesses for sale to trigger ideas
Use our own site, Company Partners, and team up with a business partner to develop ideas for a business. There are as well a lot of people who have already done the initial hard work of getting a good business idea and are looking for a partner to join with them.

You can also generate your own business ideas. I like to start from first identifying a market need. This is a good way of forming a business that is likely to work. Having said that, who would ever think there was a need for Twitter, so there are exceptions!

The 5 key things you must do before revealing your great idea

I often get calls from members who are looking for a Business Partner or Investor but are concerned about how much they can reveal of their business idea.

It is a conundrum; because on one hand you need to tell something of your business idea in order to attract a partner or funding, but too much and surely the idea will just be stolen. In my experience this is the 5 actions you must do before telling all:

Determine if your idea is patentable. Generally patents relate to new inventions that are not obvious to anyone with knowledge of the subject and can be used in some sort of industry.

You may need to employ a patent agent in order to see if your idea is patentable. We have more about patent agents in our resource pages.

If it is patentable, you should not tell anyone about it until you have applied for the patent, otherwise the idea could be considered in the public domain.
If it is not patentable, can the design of your product or brand be registered?
Design registration applies to the shape, colour and style of products that aren’t in themselves new ideas but protect your particular design.Again we have an article on our resource pages on this, see Design Registration.
Think about protecting your brand. This is your logo, product names or packaging and any distinguishing ways you have of representing yourself. See How Trademarks Work and this resource has information on Copyrights.
Spotted a gap in the market? Have a novel way of doing business?
Unfortunately there’s no registration that will protect ways of doing business or addressing a new market area.

If you are concerned about discussing your original idea for a business with a potential partner or Investor you could ask them to sign a Non-disclosure Agreement. You can see a NDA example here.
Finally, get first mover advantage. If your great business idea really is good, eventually others will start to copy you. This is inevitable, but by being the first to market you will already have captured some customer’s loyalty and will be ahead of the competition in terms of understanding the market and developing your product or service.
To grab that first mover advantage you must move fast and when you have launched keep innovating, don’t rest on your laurels.

To give a bit of reassurance, in all the time that I have been advising and helping people with business plans and bringing business partners and Investors together I’ve seen no cases where an idea has been stolen.

Generally it is the implementation of the business idea rather than the idea itself which counts. There are a lot of good ideas, but most never get off the drawing board and the ones that are successful are those that are not only acted upon, but are executed brilliantly.

Case study – finding a business partner

With Peer-2-Peer lending growing in popularity, Norman Akram realised that there was an opportunity for a company whose business model protects lenders against bad debt (most Peer-2-Peer loans are unsecured).

A well tried model already existed in the form of pawnbroking and Norman set about developing a website platform for lenders and borrowers to interact with one another, allowing loans to be secured by suitably valued goods.

Although Norman had the concept, he required partners with complimentary skills such as finance, management and marketing.

Having tried other places he turned to Company Partners and joined as a member to look for either a business partner or an Investor for his start-up.

That’s where Richard Luxmore came in. Richard had joined Company Partners as an Investor and had a background in accountancy and management, but was looking for a new and interesting challenge.

After finding each other on the site, they progressed through emails and then Norman and Richard agreed to meet up and look at how they could work together.

How did that meeting go? Well the proof is in the launch now of one of the most innovative and fast growing businesses I’ve seen for awhile; Fundingsecure.com .

There are some lessons to be had from this success.

Do your research upfront. Norman had already gathered accurate statistics and information on competition and the market. When he met Richard, he could present the facts, not just a hopeful idea.
Have a vision of what you want to create. Then when inevitably you have to be flexible in altering aspects of the business you can refer back to that vision to ensure you make the right changes.
Start with a partnership heads of agreement or get something down in writing of how you will work with your business partner, but be prepared to be flexible in changing it as you discover what works.
Build a team of good people around you, be flexible (that word again) with your infrastructure in order to maximise each person’s contribution and to accommodate those good people.
Don’t have high fixed costs, such as premises or cars and do as much as you can yourself. Preparing some external work like web site design before the programmers start and preparing legal documents that the lawyers could then review all help precious start-up funds go further.
For those thinking of a web based business, be aware that offshore web development may seem cheaper, but in a start-up you need to be able to sit down and talk with your developers, Fundingsecure changed from an offshore developer to a local one to ensure communications worked.

If you want to find a business partner like Norman and Richard, have a look at what Company Partners does for its members.

Why have a business partner?

Business Partners
Bill Gates and Paul Allen

As you may know, we match entrepreneurs with other like-minded business partners and have done so successfully for many years now.

But I was asked the other day why people seem to prefer working with a business partner rather than splashing out on their own.

After all there are famous solo entrepreneurs aren’t there? Bill Gates, Richard Branson, Steve Jobs, the list goes on. Well, there may be some great entrepreneurs who have never had a partner, but most have.

Bill Gates started Microsoft with Paul Allen, Richard Branson always had a founding partner in each of his ventures, starting Virgin Records with Nik Powell and Virgin Atlantic with Randolph Fields & Alan Hellary. Steve Jobs started Apple with Stephen Wozniak.

In each case though, the roles and responsibilities were split according to the strengths of the individuals, with one of the founders assuming the public face of the company.

Starting a business with a partner is undoubtedly a way of sharing the work load and risk involved. It also allows for a greater coverage of the skills needed, with perhaps one being more comfortable technically and one more at ease with the commercial side.

I wrote recently about the reasons for having a business partner, from feedback that our members passed on.

There may at some stage be reasons why one or other of the partners wants to move on and as in any partnership there can be tensions at times. To give the partnership the best chance of success a partnership agreement should be put in place. This prevents misunderstandings and establishes a strong basis for a good working relationship.

How to find more customers – the top 5

1. Get free PR

If there was an unlimited amount of money to spend, advertising would be easy, but normally there isn’t. So what can you do? Well this is where free PR comes in. PR is of course short for Public Relations and was the remit of large corporations, but has now become a valuable tool for gaining public recognition of your business and products as well as building your image.

In many ways it’s the best form of advertising, because it doesn’t use sales techniques that customers are suspicious of, instead it promotes a positive message about your business that can develop customer loyalty and encourage new customers to find out more about your services or products.

You can hire a PR company to do all this for you, but that’s not cheap, so why not do it yourself. The media have to fill their papers and their broadcasts with content every day. The key is to make it interesting and have a human interest angle, not just the history of your company or latest product.

For our full members we have a comprehensive write-up on getting free PR (btw if you are a full member you also get access to business partners, mentors and business angels investors) – How to get free PR

2. Make marketing work

Marketing is the overall term for PR, advertising, branding, pricing and identifying the products that your customers want. It therefore looks at the big picture. Each business should have a marketing plan, which pulls all this together and makes sure that you have not missed an important step that will grow your business.

The main key though in making marketing work is to segment your market into bite size pieces. That way you can get your messages tailored exactly right for your potential customer. I wrote a blog on that which may help – How to market smarter

If you’re thinking of writing a marketing plan for your business, you may be interested in a deal we put together with Palo Alto to get a free copy of Marketing Plan Pro software with each copy of Business Plan Pro bought from them, you can see more here – Sales and marketing plan

3. Using a web site to generate new business

Nearly every business has a web site nowadays and if you haven’t you really must get one, it isn’t expensive and I can’t think of any business that can do without it. The first thing will be finding a domain name that meets your business needs.

Ideally the domain name would contain the key words that people will search to find your product or service, such as “bestsheds” or “berkshireaccountants”. It doesn’t have to be your company name.

Using your company name is also okay and allows you to keep your products and services unrestricted by the web site name, but the site will be harder to find on search engines for your products, so you will need to do more work on its visibility. If someone already knows your business name it will come up, but you want to be found by people who don’t know you and are searching for what you can provide.

There are plenty of very inexpensive web site packages around. Choose one that allows you to easily make changes to it, because the worst thing is seeing a site that hasn’t been updated for 2 years. Have several new items, testimonials or articles that show that it is up-to-date.

If possible get a local web designer to produce the site, again not too expensive an option. Pick one whose work is attractive to you. He can help you optimise it so it can be found on search engines like Google.

Don’t get sucked in though by all those emails from companies wanting to provide SEO (search engine optimisation). If you can afford it pick a well trusted digital marketing business, but it won’t be cheap. You can do it yourself, have a look at Perfecting a business web site .

4. Don’t use a free email address

Using gmail, hotmail or any of the free email addresses looks amateur if you are running a business. It’s okay for private use, but when you are trying to show that your business is worth buying from or investing in, then it looks shoddy.

If you already have a domain name, adding email on to it is cheap. If you haven’t a domain name for your business, get one. Then use that for email.

Put your name, contact details and a sentence saying what your business does at the bottom of your mails (as a “signature”).

5. Communicate and Network

If you have a website, offer a free incentive (such as a downloadable useful information sheet) and keep in touch with those people (make sure they have ticked a box to allow you to keep in touch).

Regularly contact existing and old customers, with special deals or just helpful information. It’s easier & cheaper than finding brand new customers.

Not everyone is comfortable with the concept of networking. It’s been over used as a term, but has been around for hundreds of years. It needn’t be hard or daunting. Just as computers talk to one another over a network and spread messages, so can us humans. The idea is that your message will pass from one person to another. A network should be more than just a list of people you talk to. It should work for you.

Thought of that way, find rememberable messages and sound-bites that you can give people you meet about your business that may cause them to mention it to someone else. On Company Partners for instance, I talk about it being like a “dating site”.

Depending on your industry and market, there will be opportunities to pass these messages on to either customers themselves, or to people who meet and influence your customers. There are thousands of organised events, choose one that best fits your market and give it a go.

Networking can also find you partners to collaborate with and ideas to try.

The old adage of invent a better mousetrap and the world will beat a path to your door, doesn’t work any more. You’ve got to tell the world about your mousetrap and show them how to get to your door.

Avoid Business Partner melt down

Business Partners Talking I had a call from a director of a business that I occasionally provide with mentoring to ask me to come round asap. Over the Xmas break he had been having second thoughts about carrying the activity on, even though it was profitable.

There was too much stress and he wasn’t getting on with his business partner. I was a bit surprised because they both contributed well to the company and had good complimentary skills, both were also quite reasonable people.

Delving into the cause of this crisis, it looked a matter of miscommunication between them. Or to be exact it was one sided communication. The director I was with sent emails explaining his activity, making suggestions for the business and never got any response from his business partner.

His partner just didn’t see the need to respond, he was busy getting on with the job.

Because they worked in different offices there was no day-to-day chats round the coffee machine and because they had distinct responsibilities they had felt it was only required to meet monthly.

This wasn’t enough interaction to run a business together. Businesses can take all of your time, fire-fighting, dealing with customers and suppliers, so that there doesn’t appear to be the time to “needlessly” be communicating with others in your own business.

But regular physical meetings and prompt electronic communication to each other is vital. It helps team spirit, reduces stress and avoids misunderstandings. The interaction can also generate new ideas that often pop out of the woodwork seemingly just by magic.

Some large companies learnt this early on. I remember going to HP’s office “beer-busts” and Cray’s picnics. IT companies seem to have latched on to ways of informal employee interaction, as well as creating regular occasions for directors to met up.

This can apply also to smaller companies where it may seem that there is no need to plan such activity, since their small size should mean that there are plenty of opportunities to talk. However as was seen, demands on an individual’s time can make that difficult.

Additionally, there can be differing attitudes to communication. One being too verbose, the other too cryptic.

What we did in this case was to meet and thrash out a common attitude and business culture for communication. All agreed that any emails sent should be answered by return if possible, to schedule weekly Skype video calls and fortnightly get-togethers. Some of which could just be an opportunity to brainstorm ideas and ensure all were going in the same direction.

Having an open and friendly approach to internal communication, sharing issues in a no-blame, constructive way has to start at the top.

In small companies there should be far less politics involved than in larger organisations and this good communication and teamwork is an advantage that smaller businesses should have over some of their larger competitors.

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