If there is one thing I have seen in my long career advising entrepreneurs and growing enterprises, is just how many business partnerships fall apart. It doesn't matter how nice and well intention-ed the co-founders or business partners are . Partnerships are like marriages. If you get stuck with the wrong partner or partners, divorce is imminent. And the fallout's are usually nasty. Most of the complaints that I see driving business partners apart are things like divergent visions and direction, differing values and modes of operation as well as varied commitment levels. I could dwell on the ugly but I choose to look at what makes good business partnerships work instead.
So what will it take to make a business partnership to work?
Shared values - without a doubt the most important thing to make a business partnership work is shared values. Do you both agree on how to do business? Do you share values like integrity, excellence , passion for client satisfaction or a commitment to delivering high quality products and services? If you do not share values or are not willing to agree on values, then the business is almost guaranteed to fail. A lack of shared values will mean that you will always be at loggerheads on how to carry out a particular task or;
Shared vision - do you have a shared vision on how you want the business to look when it succeeds? Does the end picture carry the aspirations of all partners or just a few of them? If you do not share the same end picture, then it is likely that you will pull in different directions and confuse the hell out of your staff. A shared vision can be built over time and can evolve or morph with your shared growth and perspectives but as long as you always agree, then you increase your chances of success;
Shared horizons of when the business should bring a return - If you do not agree on how to reinvest the business it could end up frustrating one or several partners who expected returns within a short period yet others want to reinvest for the future. Are you also building to keep or building to sell? Its important to agree on one or the other;
Complementary skills and outlook - If you all think too alike, you could end up heading in the wrong direction and none of you will pull the brakes and think outside the box. Different perspectives and even skill sets can be a great asset to an enterprise. There is a study that shows that companies with co-founders tend to succeed more than those with a single owner. If for nothing else, a complementary co founder of founders just ensures that every decision is thought through and reduces chances of failure. It doesn't guarantee that you wont fail though, but you will always have someone to remind you of the mistake you made in case you want to repeat it;
A commitment to resolving issues - you must be committed to resolving issues conclusively. Problems that hang unresolved can tend to fester and blow up later , sometimes bringing a catastrophe into the business. Conflict is good. Its a sign that you don't see things the same way. Resolving conflict is even better. You emerge from a conflict that is conclusively resolved, stronge;
Equal sacrifice - Some of the enterprises I have seen with great frustration are those where you have one partner holding a full time job and the other running the business full time. There can be a sense of unequal sacrifice particularly if there isn't a financial reward for the partner who is running the business full time in the form of a competitive salary to compensate him or her for the hard work. It can even be more frustrating if only one partner takes the losses and the other still has a salary as a fall back plan which he or she doesn't share. Entrepreneurship is tough. There has to be a way to compensate the sacrifice if silent partners are not working in the business full time;
Transparency and openness - A business without full transparency on decision making and financial oversight is a ticking time bomb. When one partner realizes they have been shortchanged or kept out of major financial details, the marriage will be short lived. Full transparency improves decision making and also spreads the panic in bad times;
Fewer partners - More partners introduce complexity into decision making. If you plan to start a business with more than 3 to 4 partners, then invest heavily in a decision making process that takes into account the roles, sacrifice, investment and value that all the partners bring onto the table. There isn't a sentiment that lawyers haven't figured out how to structure into a legal framework. However, for the most part, such decisions are subject to a lot of negotiation for all partners to feel comfortable and included;
If you have not yet entered a business partnership but considering one, over and above the tips given above , consider the following:
- Begin your discussions with the end in mind. Talk about the end goals in great detail.
- Talk divorce before talking marriage. Discuss what happens if it doesn't work. This sobers up discussions a lot because a lot of partnership discussions tend to focus on the positive and dreamy picture but not the dark side of the business. And dark sides bring out the worst in people. Coincidentally, so do windfalls.
- When in discussions about the hard stuff like equity and roles, never leave the negotiation table uncomfortable with the decision you just made. If possible, postpone a decision and "sleep on it" rather than be rushed into a contract that you will regret.
- Follow your gut, it has guided many entrepreneurs away from trouble.
- Learn to put things as they are and to talk openly, do not fear conflict. Conflict helps you figure out how you see life differently from your potential partner.
- Establish decision making mechanisms early, particularly on hard decisions.
- Have an open mind to consider deeply what the other person is seeing.
- Partnerships can work,and they do work, but it takes a lot of work to make a partnership work. If that makes sense.
Always remember though, that people grow and their priorities change with time. It is likely that you will do all the right things at the beginning but your partners' priorities might still change due to family issues , illnesses, tragedies, relocation, big unforeseen opportunities (like government appointments or lucrative jobs) or simply the fatigue and tiredness of doing the same thing and not seeing returns to the proportions that were anticipated during the dream phase of building the company.
If any of the above happens and you have the energy to proceed, then let go of your partner(s). Don't hold on and don't beat yourself about it. Mourn. Then pick yourself up and find a way of moving on. What you learn from failure can help you pick a strategy or partner for the future who will work with you to your eventual success.
Get in touch if you would like to know if you are in, or getting into a functional partnership.
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