I wrote an article last week about the joining the right circle. This is because who we spend our time with also have a big impact of the decisions we make. Some influences are positive but others may have a detrimental impact on one’s future. Similarly, when deciding who to do business with, you must be careful of who you join forces with.
In business, there are mainly three kinds of people that you should watch out for before letting them in in your inner circle. These are your fellow shareholders or members, your other investors as well as your workers. If not chosen carefully, they can sink the ship in your early days of trying to establish a business. Like the say, no matter how small ship can be, it’s not the storm around that will sink it, it’s the water that it allows inside that will drown it.
The competition can be stiff around your business, the economy can be tough but if your inner circle is made up of the right mix, you will withstand the test of time.
Meet one of my team mate at PAK farming, and what he has taught me about finding a business partner
Prime Shaapopi “The IFRS guy”. He is the brain child behind the farm, and things always tend to run smoothly when he is around. He is the kind of partner that is has a slightly higher risk appetite, pays attention to details, able to make independent decisions that are in the best interest of the business and finally has the patience to withstand tough times.
Risk appetite is a very important element in a business partner. The higher the risk , the greater the reward but also the increased chance of failure. Therefore having a high risk appetite can be a good and a bad thing. The good thing about Prime is that not just is he able to take risky decision, he also pay attention to details. This means before he make a decision, he considers both the prons and cons, the opportunity costs, the best case and worst case scenarios before just making a decision.
You must also look out for someone that is able to make independent decision in the absence of other people. Once I was not reachable and we had a customer that wanted x numbers of chicken at a discount price. He approved the sale of the chicken in isolation and informed me a little later. At face value it looked like a loss to the business but after I listen to his reasons, having considered the cost of feeding the chicken for an extra week and the discount given, I understood. Consultation process and unanimous consent is of course the best situation to be in but it’s not always possible.
And finally, Prime has been at the farm through thick and thin. This year alone, I was a little hesitant to invest in small chicks due to the rainy conditions that we were expecting up north. After a few deliberations, we could reach conclusion and we decided to invest on 200 chicks. Everything seems to be going well until one morning we lost 40 chicks from an unknown cause. Just like that, they were gone. At this point, this could have turned into a finger pointing situation. We looked at the situation objectively and that is the nature of the industry we are in. Long story short, we added 100 to the chicks and to date we only lost 4 since the last 40.
This is what I have learnt from the IFRS guy at PAK Farming
- Look at the risk appetite of your potential business partner. Not too risk averse and not too high either. There must be a balance.
- One that pay attention to details. This will become important if you are going to be entering into contracts.
- Someone that can independently make decisions and take responsibility of the consequences.
- Someone that will be there when your business is making a a loss, to invest in for the good times.
What have you learnt from your business partner?