Business partnerships can help to take both companies to the next level in terms of productivity and growth, but if forming a working relationship was that simple everyone would be doing it, right?
A lot of companies go into business partnerships to benefit from connections, growth opportunities and investments, while others go into a partnership in order to merge the two companies down the line when the time is right and there is the chance to come together as one highly successful business rather than two operating in similar areas and striving to reach the same goals.
There are plenty of different ways that you can go with a business partnership but the fact of the matter is that it isn’t always a straightforward or successful process. Benefitting from any kind of financial investment is, undoubtedly, a great thing; but you also need to ensure that you have a pristine working relationship in order to run your company – or companies – in the best possible way.
Unfortunately there are some partnerships that just don’t work out and that’s quite often because of a partner coming in and looking to stamp their authority on a business which goes against the values and objectives of the original business and its plan, and the relationship can break down or, worse, have a detrimental effect on the company resulting in a loss in business and staff.
Silent partnerships, on the other hand, can be immensely beneficial for all concerned enabling the business, in many ways, to continue on its mission to grow and succeed in its own way with the backing of a silent partner who contributes in the form of strategy, support or finances without getting involved in the day-to-day running of the business.
What is a silent partner?
A silent partner, in most cases, is a company investor who builds a relationship with board members or those on the management team and eventually decides to enter into an arrangement with the business where they will bring in their financial resources and expertise to help the company reach the next level.
In many instances this is because the investor has an interest in the company itself or sees value in the product or service on offer, and wishes to enter into negotiations to buy shares in the company and benefit from the profits down the line – and all without interfering in any way with the current managerial structure of the company, instead taking a backseat and becoming an almost invisible presence – or a silent partner.
What to look for in a silent partner
When it comes to choosing a new partner to work with you and your business the decision is absolutely crucial. You can’t enter into such an agreement lightly and there are all kinds of legal considerations that you’ll need to run through with a solicitor before you sign any agreements.
If you are thinking about finding an investor then there are five key things that you need to look for before you get to deep in your negotiations:
1. Expertise in your industry.
Regardless of what industry you work in you would be wise to find someone who knows about the sector, that way they can provide you with genuine advice and expertise rather than simply investing finances into your company in exchange for a share of the profits.
If you can find a partner who can assist you in taking your business to the next level, in whatever form, then that’s one big tick on your criteria checklist. A silent partner might not be seen all that often, but when they are it’s important that they can bring something to the table, especially at board meetings where input into projects, staffing and further investment is crucial.
2. A genuine interest in your business.
The mistake that a lot of businesses make is believing that the interested party is in it to help them grow and become more successful, when actually they’re only in it for personal financial gain or even to eventually acquire the business as part of their own portfolio.
When you enter into negotiations with anyone about becoming a partner it’s important to understand their motives early on, and pay attention to any alarm bells that may ring in relation to their true intentions towards your company. Your ideal investor should be someone who can bring experience, expertise and financial support to the company in order to help you develop, grow and take your business to the next level.
3. The ability to provide advice and take a step back.
A silent partner is usually required to attend board meetings even if they don’t visit the office or headquarters all that often. When they do attend it’s important to call upon their expertise while also having an agreement that they won’t interfere too much with the day-to-day running of the company. Sure, their role is to provide valuable support at management level with recommendations about who to hire, new business negotiations or contract opportunities to pursue, but it’s also important that they still allow you to run the company without feeling as though the business has got too “top heavy” with managers all pushing to show their leadership credentials.
If a silent partner is brought in it can be very confusing for staff to understand who is in charge if someone who was meant to be ‘silent’ is suddenly appearing in the boardroom and making important business decisions which ultimately affect the morale and performance of the workforce.
4. Connections to help you grow your business.
When someone comes in it’s great to be able to lean on them for their expertise and financial backing, but it’s just as important to be able to call upon their connections to help you find new growth opportunities.
Networking events and marketing are great for drumming up new business, but if you’ve got a genuine expert in the industry within your company then being able to access their pool of contacts can enable you to go directly to influential people within other businesses to enquire about pitch opportunities rather than cold-calling or sending out mass emails hoping for a reply.
5. Financial support.
Finally, and we’ve touched on it throughout this guide, it’s important that they have the financial power to support your business and enable you to grow. A lot of investors are brought in with great fanfare and there may be some initial signs of investment, such as a rebrand or new website, but serious investment in the company will enable you to increase your workforce and dedicate time and resource to new business pitches.
Before long that financial support will be paying for itself when you’re able to win new contracts and reinvest those funds into the business for even more new business opportunities, staff and improving the premises.
How to nurture a relationship with a silent partner
Developing the relationship with your chosen partner can help you to understand each other’s ways of working and a clear idea of where you’re looking to go with the company now you have a new partner involved.
Once you’ve established what it is you’re looking for from the partnership and a roadmap to help you get there, it’s time to work together to identify areas of improvement and strengths. As a silent partner they may not contribute to the daily running of the business, but they will still have input in boardroom decisions and important meetings and it’s vital that you’re on the same page to achieve your objectives. There is no point bringing a silent partner in just to use them as a cash machine, you need to call upon their experience and expertise for the good of the company.
Speak regularly about how things are going and where you see the company going in the months ahead, and allow them to come to you with ideas about whether those ideas are practical and achievable, along with advice on how to get there. The chances are that they have been there and done it all before, and as a company looking to grow that expertise could prove pivotal when it comes to making important decisions.
Why Meet Hugo are the perfect silent partners
At Meet Hugo we believe that partners can be immensely beneficial for businesses of all sizes and across all sectors, and that’s why we launched our own referral partnership – Partner with Meet Hugo – at the end of 2020. We wanted to form relationships with our subscribers that would benefit both businesses in the form of networking opportunities, business growth and – of course – an additional source of revenue.
We don’t want to get involved in the day-to-day running of your business, we just want to ensure that you have the connections to grow as and when you need them, along with vital resources to help you get there. We also want to ensure that you are rewarded financially for anyone that you refer to our platform, and we have a tiered partner system in place to ensure that you get the right kind of commission for your efforts.
A silent partner can bring about great change in a business, but in a way that doesn’t have too great an impact on the way you choose to operate your company. Sure, they have a wealth of experience and expertise that can be highly beneficial and the extra financial support that they can provide might enable you to target greater opportunities and increase staffing, but it’s paramount that you do your research, nurture the relationship and find the right partner for you.