I was intrigued by an article I read recently in The Canadian Press about the challenges a small business can face when taking on a business partner. Reading it reminded me that for many of our clients – entrepreneurial dental practice owners – moving from a sole proprietorship to a partnership represents a natural approach to growth.
Small-to-medium business owners can get so caught up in the prospect of infusing their business with investment money, help and expertise that they overlook the due diligence they would normally extend to other types of decisions. They would rarely hire an employee without a formal interview, confirmation of experience and credentials, reference checks, and a fit check… why should a potential partner undergo anything less?
A partner is a much more significant commitment. When a partnership fails, it can be emotionally and financially devastating. It disrupts your business, your staff, your patients, and could harm your reputation. Financial wrangling can lead to complete fallout and business closure. It can deliver some very hard lessons and a blow to entrepreneurial spirit. In short, it’s wise to consult with an experienced dental practice broker who knows about the issues specific to dentistry that a general business partnership advisor may not be cognizant of.
Joyce M. Rosenberg, Business Writer for the Associated Press, in her article on this topic, stresses the importance of professional financial advice and legal counsel in drawing up a partnership agreement.
Along with explicit financial and legal understanding, it is important to examine:
- Goals and vision for the business. Are you in agreement about short- and long-term goals?
- Roles and responsibilities. How will work be divided and shared? Are your clinical interests complementary, or is there potential for conflict?
- Fit. Do you complement each other in your working style? Will there be a good fit with existing staff? Do you share values and purpose?
- Work ethic. What expectations exist regarding hours of work, amount of work, pace of work, quality of work?
- Service philosophy. Do you share patient treatment and service standards?
- Growth plans. Are you in agreement regarding reinvestment versus payout?
- Conflict. Can you establish today how eventual conflict will be handled and resolved? Can you agree to recognize and confront the signs that the partnership may no longer be working?
Partners do not need to be clones of each other; different perspectives and constructive challenge are healthy in every business. But they do need to be able to communicate. They need to understand what their strengths, weakness and differences are in order to plan effectively and work through obstacles as they arise. They need to trust each other.
I often hear the comment that we spend more time with a business partner than with a life partner. Shouldn’t we exert the same degree of effort in choosing one?