Growing business is every business owner’s dream and mission. Many avenues are available for raising capital to achieve such growth. Joint ventures, partnerships, mergers and acquisitions are some methods available for growing a business.

Many emerging business owners rushed, to their peril, in establishing business relationships only to witness the devastation those relationships have caused to their companies. There’s no need to learn the hard way. Help is at hand. By Nimroth Gwetsa, 31 March 2016.

There’s nothing wrong with entering into business relationships with other companies. Agreeing to such deals without a thorough understanding of the implications of concluding them would be unwise. Common mistakes made are when parties focus mainly on seeking funding to grow the business and fail to understand the nature of benefits to be accrued and related expectations and undertakings the parties would be obligated to discharge.

Establishing cooperation between businesses is good and shouldn’t be trivialised. This applies whether the relationship results in formal changes to the structure of the company and its registrations details, or maintained as private arrangement between the parties. The relationship should not be like any other that could be tossed at will without regard for consequences of such actions.

Noting the centrality of raising capital to foster cooperation among companies, parties should also look beyond funding and be clear about the nature and implications of the relationship sought. Such parties should know the extent of their need for the other party’s capabilities.

When parties need one another’s capabilities, the relationship established would be mutually beneficial. Otherwise, it would be one-sided with a more favourable outcome accruing to the party in need of funding. And once funding has been provided, the other party risks being disregarded resulting in souring of the relationship.

There’s nothing wrong in having informal relationships with other companies. Just realise the nature and implications of the relationship you are a party to.

Relationships could be had at different stages of the company’s development. Not all relationships should last forever, neither would it be wrong for parties to aspire having permanent relationships.

As the nature of relationships differ, the essence and approach to maintaining them are also different. Healthy relationships are sustained by maintaining truthfulness, openness and selflessness.

For example:

• In comradeship, the parties could be relating on the basis of sharing a common “enemy” and not necessarily the same ideology. The common enemy in this case being lack of growth, capacity or resources. Since such shortfall could be seasonal, there might be no need for continued comradeship once the “enemy” has been overcome. Provided such conditions were disclosed upfront, it would be acceptable for parties to separate on the basis of there being little in common left uniting them on a common cause. And when it’s necessary for the parties to separate, parting ways shouldn’t be acrimonious. Partying on good terms is the best approach as it could enable further growth and a different kind of relationship later in life. And when one party wishes to end the relationship, the other shouldn’t take it personal. Leaving is part of the fabric of life and human development just as children leave parental homes for their development. Our duty is to part well and leave a “door open” for a later welcome.

• In companionship or fellowship, all that companies may need for growth could be motivation, validation and comfort from peers and exemplary leading companies. Companionship can energise companies in such relationships endure and overcome difficulties experienced. Since comfort and motivation can be from anyone, such relationships are not necessarily exclusive among the parties. Owing also to divergent needs of parties in such relationships, companionship enables parties to join “communities of interest” groups to pursue common interests. Some opportunities are only made available to companies with accredited membership to certain professional groups. Certification from such groupings can help improve a company’s capabilities and capacity to perform specialised work.

What is important though, is for companies not to see funding as the main deliverance for the required growth.

Undoubtedly, funding can bring about the deliverance to grow the business. Companies shouldn’t spend inordinate time looking for funding when much focus could be spent on improving core offerings of the business. Growth of the business can be attained proactively and effectively through fruitfulness. Fruitfulness in this case, implying increased productivity and production of good outcomes and solutions.

Fruitfulness leads to deliverance of business growth more proactively than deliverance can result in fruitfulness. In other words, securing funding first may not necessarily result in a company producing effective results. But production of effective results may proactively deliver the growth a company seeks without constraints of appeasing investors.

To this end, apart from the identities of the parties involved, when formalising relationships with other companies to foster business growth, the agreement should clearly and explicitly describe the following key elements:

• Purpose of the relationship
• Critical success factors of the relationship
• Conditions and timing for the commencement, maintenance and termination of the relationship
• Nature, type and duration of the relationship and agreement
• Specific obligations, undertakings, expectations and roles and responsibilities of the parties

Notably, business development goes through many stages and transitions in life. Expect to make mistakes including gross ones along the journey. But never give up or lose sight of the importance of remaining fruitful for your deliverance.

“A luta continua, vitória é certa“