It is often said that partnerships are like marriages. When they click, they're a beautiful thing; when they don't, it can be quite a disaster. Regarding pharmacies, we've witnessed some remarkably successful partnerships that have led to significant accomplishments. On the flip side, there have been bitter and ugly "divorces." Partnerships aren't a one-size-fits-all solution. While some owners thrive working independently, others find their groove within a partnership. It's a unique dynamic that doesn't suit everyone, and it is up to each person to go through that journey to discover if they work better alone or together.
Partnerships kick off with the best intentions. Whether it's a group pooling resources to purchase a pharmacy or an individual pharmacist joining an existing venture, it's an exhilarating moment! Goals are established, everyone is on the same page, and ambitions are clearly defined. And, as you'd hope, everything unfolds seamlessly...
I've seen best friends, siblings, in-laws, and workmates team up as business partners. In the early stages, during the “honeymoon period”, people often underestimate the importance of a partnership agreement at this point. Some consider it too pricey, unnecessary, or figure they'll handle it later. So, here's tip number one: I can assure you, at some point in your partnership, that agreement will prove crucial. Everyone will have to rely on that partnership agreement at some stage in their business journey. I strongly recommend ensuring a partnership agreement is drafted and signed before you officially tie the knot in the world of pharmacy business.
So, what happens if you find yourself in a partnership that's veering into dysfunction? What if your personal objectives begin to clash, and the misalignment in ambition and openness to change becomes apparent? What if things are getting a bit too tangled?
Here are some options below on how to manage any conflict when things aren’t going well:
1. Initiate candid conversations about everyone’s goals and vision for the business—I've found this to be an effective starting point. It's not confrontational; instead, it unfolds in a positive environment. When individuals open up about their long-term goals and their vision for the business, you often stumble upon conversations and perspectives that have never surfaced before. It's a quick way to discern whether your business goals are in sync or not.
2. Create discussions about what is the best way forward for the partnership and the business. If serious issues and differences do come up, it is time to start having an honest, but not confrontational discussion about the partnership. Are the differences able to be overcome? Can both partners make concessions to enable the business and the partnership to continue and function at an optimal level? Can you plan for a mutually agreeable plan and timeframe going forward? Perhaps the individual partners need to change roles. Perhaps there needs to be a planned buy out over a period of time. Or can you both agree on who continues with the business and who exits? The ideal outcome is for both parties to sit down at the end and can still have a beer/wine and talk as friends. That is what you want to achieve.
3. Be cautious not to let the business be the casualty; unfortunately, this is a common aftermath when partnerships undergo a severe breakdown. It's akin to a spreading cancer—the tension among partners permeates the team. The once vibrant team dynamics start to crumble. Rumors circulate, uninformed opinions take root and begin to circulate. The company culture erodes, and before too long, a toxic atmosphere takes hold. In no time, it's the business that bears the brunt. Customers depart, turnover declines, and profitability takes a hit. Accusations start flying, and, well, it's not a pleasant scenario.
4. Ensure you bring in your lawyer and personal accountant early on. When a partnership hits a breakdown, it's crucial to consult with your accountant and lawyer promptly to assess your options. This step is vital because, at this early stage, making mistakes or saying the wrong things is something you want to avoid.
5. Make sure all parties are onboard with an established process from the outset. When partners begin to disagree, it's beneficial to have everyone commit early to a defined process that binds them to the outcome. For instance, some may opt to appoint independent valuers to evaluate the business's worth or the value of each partner's interest. In some cases, two or three valuers may be involved. The parties agree to split the costs and adhere to the outcome.
6. Designate impartial adjudicators in cases where parties can't reach a consensus on assessing the value of each party's interest in the business. As highlighted earlier, the involvement of independent pharmacy specialist valuers from a bank-appointed panel is often necessary and becomes crucial during disputes. It's important to note that the respective accountants and lawyers might lack expertise in community pharmacy specifics, underscoring the need for specialised knowledge in such evaluations.
7. What’s the worst-case scenario? If the partners can’t come to an agreement often it’s the business that has to be sold and the market will determine what the business is worth. Often it gets sold for less than what its potential is, as by this stage the trading performance is declining, and the fighting has taken its toll.
It's a challenging journey, often extended, emotionally taxing, and costly. If not handled correctly, it can have repercussions on both you and the business. Balancing emotions while making rational, objective business decisions is no easy feat. Money has a way of making people act strangely—not in a humorous way, but in a peculiar, unpredictable manner. Disputes involving money can evoke intense emotions, sometimes leading to irrational behavior, so tread carefully. While not all business partnerships work out, it doesn't have to escalate into a massive ordeal either