By Elie Y. Katz
National Retail Solutions
A business partnership is like a marriage. When good, it can be satisfying, empowering and show tremendous growth with long-term success. When bad, it can pull the life out of you and become a legal nightmare that drains your resources.
But going into a business alone has many challenges. The pressure and stress associated with running a small to midsize business can take quite a toll on a sole proprietor who must balance everything from obtaining startup capital and budgeting, to hiring staff and keeping an eye on inventory, to planning a marketing campaign and building relationships with the public and distributors.
These stressors can run a merchant ragged and result in sleepless nights and excessive worrying. Running a store by yourself can actually reduce physical and emotional health and even lead to burnout. That dilutes the excitement, self-confidence and happiness that should result from running a mom-and-pop grocery, c-store or retail establishment.
Business owners can prevent becoming overwhelmed by working with a business partner. A partnership, in many ways, can be much stronger than a single owner taking on the entire load of work. For starters, business partners can split duties, review each other's work and bounce ideas off one another.
Before a business that a retailer has dreamed about can become a reality, the store owner must obtain startup capital for everything from designing and implementing the store’s layout, purchasing inventory, buying a point of sale (POS) system to properly budgeting for utilities, payroll and other expenses. Starting a new business can be costly even when done properly, and can become a financial disaster if rushed or done off the cuff without budgeting and planning.
It's great to have a business partner to share established startup costs and help increase the amount of capital for stocking more products and amenities in your store when you first launch, as well as in an ongoing relationship. A business partner with experience may also know more about running a business than you and therefore be a great resource in many areas.
Once you've obtained capital to start your business, superb budgeting (and following plans) is essential to hit the ground running without coming to a complete stop a short while later. A budget plan must take an array of factors into consideration. These include how much funding to set aside for purchasing starting-point equipment, such as shelving, storage space and kitchen items if you plan to serve hot food, and accounting for potential equipment upgrades and renovations down the line.
Budgeting should also include marketing. Key to success is customer retention. Advertising strategies and a website with SEM/SEO campaigns to attract web customers and keep up with the online competition are essential. Smart budgeting must also leave enough money set aside in a rainy day fund to offset unpredictable expenses, such as the need for a new heating or air conditioning unit, stocking of newly discovered inventory ideas, special event planning and more.
Working with an experienced business partner can help avoid budget holes and pitfalls. You may complement one another. One partner may be an expert in store design while the other has more financial acumen. Partners can corroborate on the budget plan and provide valuable feedback that can strengthen the business model. Partners can split up budget preparation duties. For instance, one partner can work on physical expenses while the other concentrates on the marketing plan. A partnership makes for a more enhanced and efficient budget planning process.
A solid partnership is also a great help when making payroll decisions. Two minds are better than one when it comes to determining how many employees to hire when it's time for the grand opening, how much to pay them and how to sustain them when business is slow.
You also need to know when it's time to hire seasonal or additional full-time employees and how much surplus to put aside for staffing costs. Bouncing numbers and scenarios off one another can spur inspiration and creativity in contrast with working on a static foundation, and ultimately make for better informed staffing decisions.
Funding is essential to building inventory. Smart analyses and decisions are key to ensuring that you build the right inventory. By having a business partner, you are less likely to make a misjudgment because you are part of a team. It can help a lot if you bring in a partner with good credit, and/or liquid assets to contribute towards the business.
Not overstocking or understocking is crucial. If you order too much of an item, especially one that's not popular, it will take up valuable shelf and storage space without going anywhere. By understocking, you might order the right type of products but not enough of them. The items fly off the shelf, but too many times you end up having to tell disappointed customers that you're out of stock, leading them to go to your competitor for their purchases. If you get a reputation of being a store that's always out of things, you'll lose customers and deter people from ever entering your shop.
The intensity of finding a location for your business and/or building an ecommerce platform can also be overwhelming to one person who wears every hat. Again, funding is critical—and can be expensive—but is well worth the investment. Having a partner to give you a break at times will lessen stress on both of you.
Entering into a business partnership can be key to building relationships with the public, manufacturers and distributors. While one partner can be at the store and working on tasks like budgeting or inventory, the other can be out in the community building relationships. They'll have time for personal visits with vendors and attend and participate in community events, such as setting up a table at a street fair. By pooling resources, you'll build your network and gain valuable referrals.
Everything I've mentioned is only beneficial if you choose the right business partner. Make absolutely sure it's someone you can trust and that is willing to put in the hard work; someone who won't walk away from the business at a critical time, or is unscrupulous and may try to pocket some profits when your back is turned. Michael Eisner, the former CEO of Walt Disney was quoted saying, “It is rare to find a business partner who is selfless. If you are lucky, it happens once in a lifetime.” Your relationship with your business partner will work best for both of you when your values, goals and work ethics are in alignment.
And of course, when choosing a business partner, you should look for a positive mental attitude. This will keep work pleasant and spread to your entire team and staff. Before you go in with a partner you don’t fully know yet, ask people in the business world what they know about the person and ask your potential partner for references. Then make follow-up calls. Google the person and visit their social media platforms. Do everything you can to ensure that you're entering into a partnership with an honest person who is willing to put in the work with you to build a successful business, and will take responsibility and help manage the business if you’re ever away.
Some entrepreneurs may feel there is no one more suitable in terms of honesty and knowing the person than a friend or family member. Be extremely careful with this assumption. Running a business isn't always smooth sailing. Arguments, egos and other factors, such as the business going sour, can cause fallout and feuds among friends and family. If you do go into business with a close friend or relative, separate business from personal activities as much as possible. Set boundaries and work standards that are separate from the family relationship. Establish confidentiality. And most important, clearly define roles and responsibilities to prevent resentment and mitigate failures.
Whomever you choose as a business partner, an outsider, someone highly recommended, or your brother or cousin, they must possess the utmost integrity, business acumen, patience and name recognition that will attract others to join your venture as you grow. Researching and choosing wisely are the bottom line when it comes to picking a business partner that will result in success rather than disappointment.
Elie Y. Katz, founder, president and CEO of National Retail Solutions, can be reached by email at firstname.lastname@example.org. NRS provides a POS network and NRS Pay credit card processing for thousands of independent retailers across the USA. To join the NRS Channel Sales team, visit sellnrs.com or call 888-870-0017.
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next