I recently endeavor in understanding risks faced by Entrepreneurs or Medium and Small Scale businesses. During my study I saw that "businesses are built on ladder of relationships and partnerships". Furthermore, history has shown that some major organizations thrive or fall due to partnership managements.

Even nations as an organization form alliances in other to show how strong they are. From time immemorial, businesses have thrive even in cross border trade channels. For example, Trans-Sahara, The Silk, British-Indian Spice, Incense Trade Routes etc. Civilizations thrives based on business relationships they form across civilizations, tribes and trade routes.

Industrial age gave birth to big corporations and the continued need of business partnerships for them to stay relevant. The stronger/larger partnerships built can commensurate how long you stay in business or how much profit you make.

Reasons for Partnership/Relationship

Cost management
Risk Reduction
Organizational Efficiency
Business Continuity etc.
Little is known about Small and Medium Scale Business till they grow to be known which is why focus will be on well-established relationship between grown organizations. We'll look at business relationships in the following ways:

Employee Relationships - Organizations are built around employees and the success of any organization strongly lie on them.
They are the first ambassadors. Their risk is high and so high that whatever they say about the organization is almost as loud as a customer and in some cases as loud as or even louder than a customer as the case may be.

In managing your employee be careful not to think employee satisfaction is "money based only"

Customer Relationship - All organizations exist because they are meeting a 'need'. The role of a customer can never be over emphasized. If the need of this set of people are met/exceeded an organization is sure to remain the king of the market.
Third Party Relationships - These can be your suppliers, service providers etc. Mostly for an organization that deals in goods they pose major risk in ensuring continued production. Also, Reputational Risks are associated with them.
Investors Partnerships Risks - This appears to have killed more businesses than can be counted. Investors have been known to pull out of a business venture for many reasons, and like in Third Party relationships the Reputation of a company is at risk when Investor partnership and left unmanaged.
Business Partners provide the ability for:

– Business process efficiencies

– Competitive advantages

– Cost savings

– High quality services

Finding a Compatible Partner

Do we have the same motivation, values and similar work habits?
Do we have a similar vision, ideas and objectives about how to run the business?
Is each of our strong points and skills complementary to one another?
Are we both able to communicate well with one another in a pleasant, respectful and Comfortable manner?
In your gut, do you trust this individual?


Potential Risks

Loss of autonomy: The challenge of shared decision-making processes; the need for building consensus with partners before action can be taken and the implications of wider accountability (to other partners and to wider beneficiaries)
Conflicts of interest: Where a decision or action that is right for the interests of the partnership but may be at odds with the individual organization’s interests
Drain on resources: Commitment (often significantly greater than anticipated) of time and energy of key staff in partnership building and project development in addition to any additional financial or other resource contributions
Implementation challenges: The day-to-day demands of delivering a partnership programme as a collaborative venture, with all the additional management, tracking, reporting and evaluation requirements that entails.
Negative reputation impact: When partnerships go wrong causing damage to the reputation or track record of individual partners by association.


Also, I will encourage you to do Due Diligence on your prospective partner. It can shed more light on opportunities and any other risk associated to your partner.

My Advice

Never underestimate the weakest link.
Conduct Due Diligence on Prospective Partner(s)
All Relationship should be document based. Ensure proper documentation
Establish relationship base on Mutual Benefits

this is a timely article....kudos