April 30, 2009

5 Critical Factors for Building Meaningful Business Relationships

Business relationships, like personal and romantic ones, are fundamental to our lives, whether we are freelancers or employees (I especially urge the latter group to understand that in this day and age, unless they belong to a union or have an employment contract, they have little more security or assurances than the former category). While all of these relationships share some commonalities, and all require constant nurturing, a key differentiator is financial consideration, a.k.a. money.

Dont kid yourself money does change everything, and failure to acknowledge and respect this fact can lead to disastrous results. Disputes over money can destroy friendships and marriages, so it is certainly understandable that in any form of business relationship, sensitivity towards ones economic future, earning ability, cash flow or the continued viability of a venture is very high.

There are 5 critical factors that can go a long way in helping to identify, form and cultivate over time business relationships which have real value and substance for the involved parties. This goes beyond mere networking, which when awkwardly approached is transparently insincere and self-serving. Ultimately, if you wish to be successful, you need to invest very real time and energy into the process of building these business relationships, and you must honestly care about the outcome.

So here are the Zentropists 5 Critical Factors for Building Meaningful Business Relationships:

Lets briefly comment upon each of these.

Open Communication. I strongly believe that inability or failure to clearly communicate what each party wants out of a business alliance or partnership up front, or during the course of the relationship, is a leading cause for dissatisfaction and dissolution. It is vitally important to set expectations early, and to be frank and forthcoming about what the parties each bring to the table, and how they might positively influence each other. It is understood that businesses exist to earn money, and to be profitable they must earn more than they spend, so there is no shame in couching discussions in potential return on investment (ROI) or How can we each make money by working together in some capacity? But with that being said, remember that businesses, much like nation states, dont have friends but rather have interests, and where these are in agreement and not mutually exclusive, opportunity exists to work together as allies.

Trust. Trust is essential to any form of relationship and in my opinion, is generally earned over time. Trust can take a long time to build, yet can be destroyed in an instant. Fundamentally, however, I do not believe that you can have a meaningful business relationship with a person or entity that you simply do not trust. At best, you may have some form of understanding or relationship of convenience, but such constructs are fleeting. You must be open to the notion of allowing another party to earn your trust, but not so giving as to be taken by the charlatans that will abuse this generosity of spirit. To paraphrase Ronald Reagan, Be willing to trust, but verify.

Synergy. This is a term that often pops up in discussions of strategic partnerships. Rather than being a trite expression, it actually has very real meaning, predicated on the very definition of the word (the Greek syn-ergos. or working together). Situations in which two or more entities mutually cooperate in order to facilitate an advantageous outcome can be described as synergistic. Synergy can be derived from offering services which complement each other; from shared methodologies or approaches; from offering solutions which address different aspects of the value chain, etc. At the end of the day, every business should be looking at initiatives and deals in one of two ways: is this something that allows us to make more money, or to save money? As a product or service provider, part of your sales process is to convince the prospective customer that your offering addresses this need. In a business partnership, you not only must analyze this from the prospective of the working relationship with the partner, but if mutually closing a prospect together, how your joint offering will be perceived by the would-be buyer.

Aligned Ethics and Values. It is my contention that a business cannot successfully maintain a relationship with another that does not fundamentally value the same things or view the world from a similar ethical construct. Like oil and water, inconsistencies in theory and especially in practice simply do not mix. During the course of my professional career, I have been involved with entities that, diplomatically speaking, had a far more loose definition of what is ethical and right behavior. Whether that is organizations that value the sale more than the honest fulfillment of the agreement (and devote their energies and resources accordingly), or those that believe in delivering only to the level of the clients sophistication (good enough versus doing your best for each and every client), Ive witnessed it all. Far too many people and organizations pay lip service to ethics or claim to embrace certain values, and then betray this in their actions. If a prospective or existing business partner does not walk the talk in this regard, I believe it is incumbent to disengage. If they are willing to cheat or short change a customer, or to misrepresent themselves or their capabilities and accomplishments, there is little reason to believe they will be (or have been) straight with you. Trust matters.

Reciprocity. Business relationships, like other types, can be either symmetrical or asymmetrical. By this I mean that the balance of power and capabilities may be evenly distributed in a bi-lateral arrangement (i.e. symmetrical), or may be weighed in favor of one party (i.e. asymmetrical). In either case, the willingness to reciprocate is extremely important, although it takes on even more meaning when the more powerful entity treats the junior party with respect and consideration. It is not enough to ask, Whats in it for me? but rather, you must ask, How can I bring value to this relationship and benefit the other party? Because in doing so, you are essentially building equity in the relationship, and if the other party is honorable, trustworthy and committed, you will be directly or indirectly enriching your business either now or in the future. Hence the necessity of ensuring that the other four factors are present; if they are not, it is unlikely that good faith efforts will be reciprocated, and you cannot define the relationship as meaningful.

Black Rock Consulting is always willing to explore meaningful relationships with like-minded business owners. Give us a call or send us an email and lets see where the rubber meets the road. It could be the start of a beautiful relationship