It is important for small businesses to partner up with the right associates. The right ones can magnify your strengths, while the wrong ones can magnify your weaknesses. If you are caught in a bad relationship with a business partner, here are some SMART tips to help!
Create an Operating Agreement
Remember that there wouldn’t be any sort of partnership if you didn’t play ball. A business partnership is delicately balanced, by both parties pulling their weight. If you believe you’re being treated unfairly, you need to enact clauses in the contract that protect you.
This is why you need a proper legal team with you in the negotiations of any potential partnership. Medium-sized businesses will usually dwarf the financial capabilities and disposable income for lawyers than any small business.
Therefore you cannot rely on winning a legal battle after you have signed the contract. It’s in your best interest to hire at least two different legal teams to draw up the contract from your side. This way you can get a second opinion and have another set of eyes on the contract.
Clearly Understand How and When You Will Get Paid
The main reasons partnerships break up? Money. When you’re working with large partners, you will need to become accustomed to being a lot more flexible and adaptable than they are. Small businesses are able to quickly adjust to what’s going on in the market and customer needs.
Large companies that operate in the B2B industry such as distributors and marketing companies, will have a slow financial machine. Therefore, you cannot always expect to be paid on time all the time. You might need urgent payment so you can fund another project or pour more cash into a marketing campaign while a rival is nipping at your heels.
However, large multinational corporations that you have partnered with, are slow to understand and react to your concerns. Instead of waiting around, use an invoice factoring service. The service will buy invoices from you that they know will be paid in the end.
They’ll give you a percentage of the invoice upfront in cash. They’ll then catch up with the partner that owes you, get the full payment from them and give you the remaining percentage of the invoice. They will require a few which they will minus from the recovered payment. The benefit of this is, you get an immediate cash injection to use on whatever you need, instead of waiting a couple days or weeks.
It’s tough for small businesses to be scary to larger businesses. You just don’t have the legal or financial firepower to take companies on as soon as you’re. Large companies know that SMEs can’t challenge their team of lawyers or have enough resources to quickly form another B2B relationship.
What you mustn’t do is lose your cool. It’s better to log the activity that you believe is breaking contract rules or being pushed around. If a partner demands a batch of products to be delivered a week earlier, log this into a report. Log the conversation or email details, who you spoke with and any kind of formal evidence. If a partner hasn’t delivered services to you in a timely and or effective manner, log this down in the same way.
Gradually, you will have a series of events which you can use in a breach of contract case, that even the best lawyers will wince at. Bide your time and be patient, even though being carelessly treated impacts your business. Eventually, you will receive compensation or better yet, the partner will want to settle out of court to keep their name out of the media.
Not all B2B partnerships go smoothly. You will need to be wary of the company you’re signing a contract with. Hire two separate legal teams to create and examine the contracts.