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Building a Business Partnership That Lasts

August 16, 2011

URL: http://www.entrepreneur.com/article/220115

Keith Richards and Mick Jagger. Bill Gates and Steve Ballmer. Warren Buffett and CharlieMunger. Bill Hewlett and Dave Packard. What do these famous partnerships have in common?

They lasted a long time -- and in some cases are still going strong. Why is it that some

partnerships succeed while others crash and burn?

To find an answer, we asked a few experts to give us an inside look at what has made these

partnerships thrive. Among them were Doug Conant, CEO of Campbell Soup Company, and

Denise Morrison, Campbell's executive vice president and chief operating officer. The two haveworked together for several years, most recently side by side as partners. All of the experts we

consulted identified four key elements that define lasting business partnerships:

Trust

Not surprisingly, trust is the foundation for any successful partnership. But what exactly does

that mean?

"Trust implies that both parties participate in the relationship with both gives' and gets,'" saysMorrison, who on August 1, 2011, will take the helm as the first woman CEO in the 142-year

history of Campbell Soup Company. "The attitude of giving a full commitment to the partnership

will usually result in getting the same commitment in return," she says.

It's that very commitment that has kept Warren Buffett and his vice chairman of Berkshire

Hathaway, Charlie Munger, working together for more than 30 years. Indeed, while they areknown to be exact opposites in terms of personality, their deep trust in one another has allowedtheir partnership to be mutually beneficial despite their differences.

Mutual respectIf you look at these famous examples, you'll notice that each pair has complementary skill sets

that allow the partners to respect each other's unique strengths. Each partner needs to

"acknowledge that no matter who did what or how much, nothing could have been accomplishedwithout the work and contribution of the other," says Lee H. Igel, Ph.D., assistant professor at

New York University's School of Continuing and Professional Studies.

Keith Richards, for example, an expert musician, relies on Jagger's skills as a vocalist, lyricistand businessman. Similarly, though Bill Gates is no longer at Microsoft, his genius at software

development, combined with Steve Ballmer's ability to drive ideas from inception toimplementation, made them a successful pair. "Gates came to appreciate over time that Ballmer

was able to operationalize his thinking abilities as opposed to trying to control everything," says

Myron Beard, who has a Ph.D. in psychology and runs his own executive consulting firm.

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Shared vision and valuesThat being said, it's important that partners aren't too different when it comes to goals. Hewlett

and Packard, both Stanford University electrical engineering graduates, worked together on afellowship. When they launched their business in Packard's garage near Palo Alto, California, in

1939, they shared the same mission and objective: to build an electronics company.

"What cripples famous partnerships to a point of failure is when, after achieving success, the

partners have the interest and opportunity to take on new projects," says Igel. "New projects can

require new missions and objectives that take the partners in different directions, and so theelements of the relationship that made them successful end up frittering away."

Honest and open communicationTaking on a partner is like taking on a spouse. That means you need to have honest and open

communication -- always, no matter how difficult the topic. This includes talking about money,

mistakes and different management styles.

"It's extremely important that you let people know where you stand -- what motivates you, howyou operate, what your expectations are, et cetera. I make it a practice to meet with everyone on

my team very early on and tell them everything they need to know about me," says Conant, theCEO of Campbell Soup Company, who has an entire website dedicated to hisleadership

philosophies. "At the end of the meeting, I encourage them to tell me what I need to know about

them. It makes for a more productive partnership."

Declaring yourself also includes telling the truth. Partnerships fail when one partner "does a little

deal on the side or wants to break away and the second party finds out about it," says Dr. KarissaThacker, adjunct faculty member at the University of Delaware's MBA program.

As you work to make your partnership thrive, "find a win-win solution that is fair to both parties,and establish clear metrics for success," says Morrison. Anyone who's been in a partnership can

tell you that they aren't easy -- but they can also be extremely rewarding, and perhaps even

essential to the success of your venture.

Copyright 2013 Entrepreneur Media, Inc. All rights reserved.

This analysis is country specific and applies only to the Nigerian audience of this blog.

The primary purpose of governance is job creation. Every focused government in world history utilizes a

cocktail of tools to grow jobs and through it minimize poverty and misery of its citizens. One such tool is

the national budget.Nigerian governments since 1970 have unfortunately utilized budgets only to run its large and inefficient

bureaucracy with little or nothing to show for infrastructure and job creation. President Goodluck

Jonathan continues this anti-development tradition of Nigerian governments with his budget 2013

proposal presented to the National Assembly last week.

With a projected aggregate expenditure of 4.92 trillion naira, it has allocations of 2.4trillion naira for

recurrent (non debt),591.76 billion naira for debt service, 380 billion naira statutory transfers and

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1.54trillion naira for capital expenditure.

The capital budget represents 31.3% of the overall proposal as against 68.7% recurrent expenditure.

This means the federal government will spend close to 70 naira out of every 100 naira on itself, to

service its large in-efficient bureaucracy. Only 31 naira out of every 100 naira will be spent on capital

projectsthe critical aspect that impacts significantly on citizens and businesses. This capital expenditure

is further discounted by non-implementation , sub/poor implementation of the capital budget and

corruption to further reduce the actual government expenditure on capital projects to anywhere

between 5-15 % annually. The import of this expenditure profile on the infrastructure of the Nation and

the economic well-being of its citizens is clear, even to the blind.

The Federal government also signaled the retention of the current pro-government, anti-business and

anti-development monetary policy of the Central Bank of Nigeria.

The combination of the Federal governments budget 2013 proposal and the continued retention of the

current monetary policy of the CBN will present your business with the following economic environment

of doing business in Nigeria in 2013:

GDP growth rate :6 + or -1%

Inflation: 15+ or -2%

Interest rates: 22 + or 2%

Continued crowding out of the private sector from borrowings by government

Continued depreciation of the naira. The currency to hold remains the dollar

High unemployment rate and continued job and business attrition

Worsening poverty indices

Constrained demand: weak consumer demand, strong government demand

IMPLICATIONS FOR BUSINESS GROWTH: You need to grow your business by a minimum of 15%(nominal

growth) in 2013 to retain your 2012 value. You need to increase your prices by a minimum of 15% to

retain the value of 2012 prices of your products or services. You need to increase the salary of your

associates by a minimum of 15% for them to retain the value of their 2012 earnings and so on and so

forth. Double digit growth of your business in 2013 is therefore a must to remain competitive. We will

tell you what to do to achieve this.

Obviously, one tool available to businesses in Nigeria in 2013 to retain and optimize value is price

increase. However, unless market share is not a priority for your business in 2013 or your target market

consists of government and the high end of the market, you have got to be very careful about price

increases in 2013.Poverty indices are worsening in Nigeria and are still headed south in

2013.Optimization of non-price increase value appropriating strategies will be key to growing businesses

in Nigeria in 2013.

IMPLICATIONS FOR BUSINESS COMPETITIVENESS IN 2013:The imperiled competitiveness of Nigerian

businesses relative to their competitors from focused economies continues unabated in 2013.This

imperiled competitiveness will continue to be induced by high inflation(zero-hugging in focused

economies),low access to credit(moderate to high in focused economies),high interest rates(over 20% in

Nigeria versus low single digit in focused economies, continued depreciation of the naira versus stable

to firming up of national currencies in focused economies etc. This imperiled competitiveness will

continue to crowd out Nigerian businesses, even in our internal markets. One strategy to remain

competitive in our internal markets is high tariffs/banning of foreign goods and services by government-

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the Dangote model , applied initially to cement but now being replicated in other sectors of the Nigerian

economy. However, note that banning and high tariffs have been found to be ultimately detrimental to

economies of countries that apply them.

IMPLICATIONS FOR FUNDING FOR GROWTH: Winning Entrepreneurs, Business owners and CEOs utilize

external funds to grow their businesses. These funds can be debt(interest or non-interest bearing) or

equity. Businesses in Nigeria will continue to be crowded out of borrowing by governments in Nigeria in

2013. Access to funds to grow private businesses will remain challenging in 2013 and where available

will be priced out of reach of SMEs. Interest bearing loans will continue to be priced beyond 20% for

SMEs in 2013.

Unless you are in a high velocity business(e.g food consumables) or high margin business(monopoly or

near monopoly),or you do not care risking your equity, be careful with funding your business growth

with interest bearing debt in 2013. Optimize the use of non-interest bearing debt and equity to grow

your business in 2013.

GOVERNMENT REMAINS GOOD BUSINESS: As pointed out earlier, the Federal government will spend

close to 70% of its earnings(about 3.4 trillion naira) on itself and its large and in-efficient bureaucracy.

Only 31% of its earnings will be spent on capital expenditure, the critical part that impacts on businesses

and its citizens. This will be further discounted by non and sub/poor implementation of the capital

budget as well as increasing corruption to anywhere between 5% to 15% of federal expenditure as the

actual capital expenditure in 2013.The actual recurrent expenditure of the federal government will be

anywhere between 85-95% of federal expenditure! The impact of this on our infrastructure is obvious.

Budget 2013 of the Federal government of Nigeria is all about government. It is a budget to fund the

greed of the Federal government of Nigeria and its functionaries. It is anti-business, anti-people and

anti-development. The Federal government of Nigeria will continue to be rich in 2013 while its citizens

will continue to be impoverished. Government business will therefore continue to be good business in

2013.Is government your customer? You may need government to realize your business growth

objectives in 2013.

The Author, Dr. Kennedy Ononaeke, is a business growth strategist and CEO of Winning Edge Consulting

Limited- a healthcare consulting and training firm. For a free consultation on how to get your business

ready for 2013, call: 2348035875796 or email: kennedyononaeke@winningedge.com.ng.

For Free Business TIPS newsletter, Go to: www.winningedge.com.ng