Adding a Business Partner
At a certain point in the evolution of your business, you might want to seek out a business partner. Gaining a business partner is a more formal arrangement than having a promotional partner. There are many reasons to merge with a business partner.
Business partners can provide complementary skills and resources. If you realize that your business growth is limited because you don't have the contacts you need to get contracts with major companies and private organizations, joining forces with someone who's worked with these major clients and is excellent at sales makes sense. Since you're a small company and can't afford to pay a new sales director much of a salary, you'll need to offer a sweetened commission rate of at least 7 percent. You might even have to make him a partner in the business, giving him some stock and making him a part owner.
Realizing that you're overwhelmed and can't possibly manage your entire thriving business is another reason to bring in a partner. Perhaps you know someone who could handle all the office operations for you and let you focus on your kitchen talent. Bringing her in as a partner rather than an employee might be the best thing for the business.
Remember, a partner will have different motivation than even the best and most loyal hourly or salaried employee. You'll be able to attract a more experienced and higher-skilled person if you make her a partner.
Fifty-fifty partnerships don't work. Someone needs to be the tiebreaker, and you started the business. Make sure you retain majority control with any partner and keep at least 51 percent of the voting rights.
Partnering with someone who has better cash flow, is more established, and can provide much needed resources is also justification for forming a business partnership. Bringing in a business partner with a different business model can strengthen your business. By partnering with a less seasonal business, you can ensure a more stable cash flow, which will allow you to maintain year-round sales staff. In this way, you'll have a better, more loyal staff and will be able to handle more clients and larger jobs.
Joining a More Established Business
Joining with a more established business will give you added clout with banks and other institutions if you need to take out a loan to buy additional equipment. Consider joining forces with an established wedding cake business, catering equipment manufacturer, or food trucking fleet. By doing this, you won't have to outsource as much.
Marketing your business will be easier if you partner with an existing, established popular brand. Rather than starting from scratch, potential customers will already recognize and trust the name of your partner, making the decision easier for them to try your services.
If you're just not making enough to stay in business, it may make more sense to partner with a slightly bigger caterer than to close up shop. You'll have to give up some of the ownership of your company, but you'll gain catering referrals and the use of other equipment and resources.
How to Choose a Partner
Be creative when considering potential partners. The most important thing about a business partner is that you trust him and that you work well together. Spend time getting to know your prospective partner and make sure that your personalities and work styles are compatible. Make sure you learn about each other during stressful days as well as more normal days. You might be able to work with someone when there's no deadline looming, but he might turn into Mr. Hyde when an event is only hours away.
Networking for a Partner
Networking is essential for finding the right business partners. Start by asking your lawyer, accountant, and other advisory professionals who they know. Meet with anyone they suggest who's willing to sit down with you. If they're not the right partners, then maybe they can introduce you to someone who is. Ask everyone you know, from your vendors to your clients. Eventually you'll meet the right person.
Wealthy, happy clients are a great networking resource. Tell them you want to expand your business and ask if they know anyone who might be able to advise you. They might offer to help you themselves or provide valuable advice, especially if they're a lawyer, an accountant, finance expert, or consultant.
Some of the promotional partners mentioned earlier in the chapter can also make good business partners. A successful owner of a food importing company might be interested in investing in your company if you're willing to develop menus that showcase her products. An established local restaurateur may be interested in having you take over his catering operations if they're distracting him from his main business of serving his restaurant customers.
Venture capitalists and private equity professionals are a possible source of business partners. These are investment professionals who specialize in investing in smaller, growth-oriented companies. Some venture capitalists and private equity specialists work at independent firms, and most investment banks have venture capital and private equity groups. If you know anyone in investment banking, try to network with them.
Venture Capitalists and Angel Investors
For venture capital and private placement, you'll need a good catering concept that can be duplicated or franchised, and you'll need to show that you're growing profitably. Venture capitalists will infuse your company with cash, but they will take a piece of the business and become owners with you.
Angel investors are another possible group. Angels are private investors who wish to support entrepreneurs. They may be experienced, retired professionals with money to invest, while others might be successful entrepreneurs who like to support other enterprising people. It's not easy to find an angel who will give you $50,000–100,000 for your company, but there are ways to try to find them. There are formal networks of angels across the country. While you're networking, ask if anyone belongs to an angel network or knows an angel. The Internet is a good place to start researching angel networks in your area. A couple of angel groups who will consider nonhigh-tech businesses are listed in Appendix A.
Becoming a Full-Service Event Company
Partnering with other successful entrepreneurs will allow you to create a virtual full-service event planning agency. With promotional, public relations, and business partners, you'll be able to offer every possible event-related resource to your clients in one place: your own. You'll be invaluable to your clients not only as a skilled caterer but also as an important information resource. The more you can offer your clients in an easy, efficient manner through high-quality partnerships, the more valuable you'll be.