Do you sometimes feel you need to walk away from a business deal? You are probably right.
Whether you are an established big business or just starting out, the allure of growth through referrals, business partnerships and joint ventures can be quite compelling, and in many instances does lead to great mutual growth.
However, not all relationships and deals are built equally and there are some common warning signs to look out for when brokering a joint venture, partnership or referral model.
Here are the three signs you need to walk away from a business deal:
1. Unwillingness to sign a contract
In modern business, we are all about the warm referrals. I cannot tell you how many times my businesses have benefitted from casual B2B referral arrangements. However, a genuine Joint Venture, Partnership or high volume Referral Scheme that requires you to implement significant process changes within your own business to facilitate the new structure and scale; well this is a completely different ball game and 100% requires a contract.
If you have attended countless meetings and phone hook ups, agreed on processes and defined the overall value proposition including commission rates; but the other party is hesitant to sign a contract, does not actively participate in commercial conversations, or will not share the cost of contract establishment – then this is a big warning sign! You must always feel comfortable to walk away from a business deal regardless of how appealing it may seem.
For a partnerships or JV to be successful, both parties need to be equally engaged in the outcome and equally committed to its success. If your other party either has no interest in signing a contract and wants to keep things casual; or alternatively is not actively participating in defining what the actual execution of the partnership will look like – then hold off. The last thing you want to do is make big changes to the way you run your business, only to have the deal fall over in 3 months.
2. Last minute and unexpected contract changes
Contract negotiations are exciting but can also be very testing as you work hard to get the deal across the line. To ensure the best outcomes during signing phase; yourself and the other party really should have agreed on all of the process, system, financial, customer experience, KPI and exit clauses before you even get to review the contract.
Which is why last minute unexpected changes should be viewed seriously.
If for example you have made an upfront time investment to map out exactly what both you, and your referral partner will offer; but at point of contract key elements like the process, data ownership or commission offering change significantly- then this can indicate a power struggle. Sure, it may feel like you are taking the higher ground by allowing small changes to what was originally agreed, but once your partner feels they have the upper hand, you can very quickly go from being a “joint partner” to them treating you like a “supplier” which is a very different dynamic.
You can still show good faith in your negotiations without giving away your position of equality in the partnership remember you have something worthy to offer and deserve to be rewarded appropriately for your part in the partnership. A good way to manage this is to objectively review the distribution of responsibility and / or reward, within the contract. If you can see that your team will be doing most of the “heavy lifting”, whether that be through service delivery, owning major administrative tasks, responsibility for back end systems etc. then the commercial structure of the deal needs to reflect that (meaning you need to be compensated accordingly).
3. Lack of common values and mutual respect
Great communication and respect are the cornerstone of any good relationship. Equally, sharing similar values towards customer service and inter-party interactions is paramount to the long terms success of a deal; particularly because creating an open and honest dialogue will play a big part in you and your JV partner continuously improving your product or service over time. Therefore, if you or your team are constantly left shocked, uneasy or off put by the way your prospective JV partner communicates in person, via email and through their body language, you have to follow your gut.
Too often intuition is left out of key decision making in business
… but your inner self knows much more than we give it credit for. The courtship phase of a partnership is when everybody is on their best behaviour; so, if communication if tenuous from the beginning it may be best to weigh up the true opportunity cost and trade-offs of moving forward with the deal.
