I wanted to give you two tips when entering into a business relationship with a provider or a supplier. This is also going to apply when entering into any kind of revenue sharing partnership.
These are two rules I have established through the last three and half years of independent business ownership. Although I wish someone would have given me these guidelines back when I first started, because it would have saved me thousands of dollars and a lot of time, I value having gone through some of the more painful experiences. The reason is that I learned some great lessons and is has given me some invaluable perspective and strengthened my resolve.
These may seem fairly obvious but it is amazing how you can tend to overlook them when excited or dealing with unknown territory.
Rule #1: Do Your Homework
These means that you need to do your research on a particular company, industry and the chief people involved. This obviously includes anyone you are looking to partner with. This is more than just customer research like looking at reviews on websites, although this too will be necessary. This includes odd and unique things such as, checking domain age, Googling phone numbers, checking addresses and other unique double-checking mechanisms
The best personal example I have is as follows. There was one instance when I caught wind of a shady company I was working with by zooming in on the street view for Google maps of the company address. It revealed basically a warehouse, which was not indicative of what the company was representing on their website and on phone calls. Further research showed that the company was simply a pass-through or white labeled middle man for another company. They were providing no additional services and marking up the service 100%.
Rule #2: Do Nothing without Proper Paperwork
I’ve made the mistake of “cowboying” my way through numerous business dealings without the proper paperwork and it has come back to bite me in the butt more times than one. My personality is that of “let’s get to work now and we will iron out the details later.” It is ok to work without all the details figured out to some extent, and will actually be required sometimes, however some basics need to be covered.
The big one is how you will be paid. The best personal example I have is when I went out and brought a customer to a provider without the compensation documentation completely worked out. Long story short, I was never compensated for facilitating that sale.
The takeaway here is getting the majors in writing first. This is especially true when entering a business partnership. A basic operating agreement is a must before starting the business. This will outline roles and responsibilities as well as serve as an unbiased 3rd party in the event a disagreement arises.
It is not that the written documents will be iron clad, although they will give you more ground to stand on when bringing legal action. The bigger idea with putting things in writing is that it shows the intent of the parties to be upfront, and professional. It also serves as a clear indicator of the expectations of the relationship.
There are more rules, than just this, but I have found these two critical. Let me know what your thoughts are below.