The coronavirus crisis has highlighted the importance of trust in institutions, including business, media, government, and nonprofits. According to the Edelman Trust Barometer, trust declined in the U.S. economy by five points after November 2020. Health misinformation, racial injustice, and more caused people to become more skeptical and fueled additional turbulence. Trust is what allows people to safely and productively live and work together. Without it, conflict runs rampant.
This also holds true when it comes to business partnerships. Trust in decision-making is key when it comes to relying on a partner who will support your company. After all, a business relationship will marry your finances, company outlook, and reputation with those of your partner. Remember how the Kraft and Starbucks partnership failed a decade ago? If you don’t have confidence in your partner, you’re building a house on an unstable foundation. In fact, research suggests that up to 70% of business partnerships fail due to trust issues and deteriorating relationships.
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Tips To Build Trust In Business Partnerships
How can you build (and maintain) trust in business partnerships? The truth is that it’s difficult to manufacture. It takes time to learn to lean on someone and believe that they’ll do the right thing. Merging mutual interests is a great place to start. For instance, Target wants to improve its beauty section, and Ulta wants to become more accessible to everyday shoppers; their partnership is designed to build trust. So as you develop rapport with a potential partner, follow these three steps to ensure trust has the opportunity to grow and flourish:
Trust Your Gut
If you’re questioning whether or not trust exists in a relationship, you already have the answer: It doesn’t. During a recent deal Four Pillars Investors was constructing, one of the parties contacted people without our permission in clear violation of the terms of our nondisclosure agreement. Although the information they shared wasn’t confidential, they were knowingly going against something they had just agreed to — damaging the trust we’d built.
When trust is compromised, there are unavoidable consequences for any business relationship. For instance, you might feel like it’s impossible to do business without second-guessing every action your partner makes. Needless to say, we won’t choose to work with the offending party again because they no longer have our trust. Before investing in any partnership, take a moment to listen to your gut reaction. Trust isn’t tangible, so if you feel like something is off, you might be right.
Discuss Issues Openly
When you truly trust your business partner, you can discuss complex issues openly and address all the nuances that might factor into decisions. In my own partnership, I often find that seemingly difficult decisions become much clearer when my partner and I can talk through things out loud. Coming to a consensus helps give both parties confidence that the decision is the right one. Regularly verbalizing your thought processes when approaching a decision can also help your partner know where you stand when you aren’t available. This can lead to situations where your partners make the “right” decisions even when you can’t weigh in with your preferences.
Make Sure Your Values Align
There’s no doubt that numbers and metrics are important when choosing a partner, but the final decision almost always comes down to who you think is the best fit. When you’re looking to partner with another person or an outside organization, you can improve the odds of finding an excellent match by searching for shared core values.
Starting or running a business isn’t easy, and any partnership will inevitably go through highs and lows as you navigate obstacles, potentially pivot business models, and pursue profitability. When you’re working with a partner who shares your values, you know that differences are more likely to be about how to achieve something and not what to achieve. Knowing that you’re working toward the same goal helps you trust your partner’s decisions — even if those plays aren’t exactly what you would have done.
The importance of trust in business relationships can’t be overstated. Trust in business is a mutual pact demonstrating that you and your partner are in it together. When one of you succeeds, you both do. When one makes a mistake, the other party is also responsible for the consequences.
Because you’re staking your financial future, company outlook, and reputation on your business partner, it’s imperative to fully trust them before entering into any agreements. If you’re not sure how to vet the relationship, trust your gut, communicate clearly and openly, and identify any shared core values. These three steps will help you establish a foundation of trust.
About the Author
Nick McLean is a founder and partner of Four Pillars Investors, an investment company that purchases and operates middle-market businesses that have an untapped potential for growth.