Struggling Phase: How the Wrong Partners Can Make It Worse: Ameen Ahsan, The Strategy Advisor
In the competitive business environment of the GCC region, partnerships are often seen as a powerful way to combine resources, expertise, and networks. However, partnerships can also be a double-edged sword—especially during challenging times. When a business enters a struggling phase, having the wrong partners can exacerbate problems and lead to disastrous outcomes.
The image above outlines three common scenarios where partnerships can go wrong during the struggling phase of a business. Understanding these scenarios can help business leaders identify warning signs and take corrective action before it’s too late.
Scenario 1: Financial Disagreements
Financial disagreements are a common issue that can arise when there is no proper financial planning or a lack of working capital buffer. This scenario often occurs when partners fail to agree on how funds should be managed or allocated, leading to financial strain on the business.
Issue Area: Disagreements over financial planning and capital management.
Reason for the Issue: The absence of financial planning and a working capital buffer can quickly lead to a financial crisis. This situation is often exacerbated by partners who do not see eye-to-eye on financial matters.
Impact on the Business: When financial disagreements escalate, the business can enter a state of panic. This often leads to poor decision-making, financial crises, and ultimately, business failure.
How to Avoid This: To prevent financial disagreements, it is crucial to establish clear financial plans and maintain a healthy working capital buffer. Partners should regularly review the financial health of the business and agree on how resources are managed. Having a financial advisor can also help provide an objective perspective and mediate disagreements.
Scenario 2: Disappearing Partners
Another troubling scenario during the struggling phase is when some partners choose to abandon ship. These partners may flee the scene to pursue other opportunities, leaving their remaining partners to manage the business on their own.
Issue Area: Partners disappearing or withdrawing from the business.
Reason for the Issue: This often happens when some partners lose interest in the business or see a more lucrative opportunity elsewhere. Their sudden departure can leave the remaining partners feeling orphaned and overwhelmed.
Impact on the Business: When partners disappear, the business can become paralyzed. Important decisions are delayed or neglected, and the burden of managing the business falls disproportionately on the remaining partners. This can lead to burnout and further decline of the business.
How to Avoid This: To mitigate the risk of disappearing partners, it is essential to foster a strong commitment to the business from all partners. This can be achieved through regular communication, setting clear expectations, and ensuring that all partners feel valued and invested in the success of the business. A partnership agreement that outlines the consequences of abandoning the business can also serve as a deterrent.
Scenario 3: Panic and Emotional Decisions
The third scenario involves partners making panic-driven or emotional decisions during times of turmoil. Without a clear vision or strategic plan, partners may react impulsively to challenges, leading to decisions that can harm the business both in the short and long term.
Issue Area: Decision-making driven by panic and emotions rather than strategy.
Reason for the Issue: A lack of vision, milestones, or strategic plans leaves partners without guidance during difficult times. In the absence of a clear roadmap, partners may make rash decisions that are not in the best interest of the business.
Impact on the Business: Panic and emotional decisions can have devastating consequences, leading to missed opportunities, financial losses, and a deterioration of business relationships.
How to Avoid This: To avoid making panic-driven decisions, partners should develop a comprehensive strategic plan that includes clear milestones and contingency plans. This plan should be revisited regularly, and partners should be encouraged to take a step back and assess situations objectively before making decisions. Having an external advisor or consultant to provide guidance during turbulent times can also be invaluable.
Conclusion: Strengthening Partnerships During Challenging Times
The struggling phase of a business is a true test of any partnership. By recognizing the potential pitfalls and taking proactive steps to address them, partners can navigate these challenging times more effectively. Whether it’s ensuring sound financial planning, fostering commitment among partners, or developing a strategic plan, these actions can make the difference between overcoming adversity and succumbing to it.
For more insights and strategies on improving the effectiveness of partners in a business, visit ameenahsan.com. At Ameen Ahsan, we specialize in helping businesses in the GCC region strengthen their partnerships, navigate challenges, and achieve long-term success.
