The Art of Business: In Praise of the Cursed Partnership
Friendship, so the adage goes, doubles happiness and halves the pain, and if all is dandy, the same can be said of professional partnerships. But a partnership gone bad, even more so than friendship, can turn that adage on its head; you can say adios to a friend, but you may be stuck with an unwanted partner for a long, long, time.
So if the urge to partner up overtakes you, stay calm and reasonable, and make sure you’re entering into this significant relationship for the right reasons. Here are a few questions you might want to ask yourself before tying the partnership knot. If you answer “no” to any one of these questions, seriously reconsider the partnership alternative.
1. Am I the partnering type? If you’ve been a sole proprietor for some time, you’ve probably gotten used to the luxury of making decisions by yourself. To thine own self be true. Could you live in a world where you have to consult with someone else before taking an action, or even worse, allowing that someone to make decisions on your behalf? As a free agent, chances are you left your last job specifically because you hungered for greater autonomy. Are you willing to forego it once again? If the answer is no, and you still feel the need to expand your business, think about hiring a subordinate with special skills.
2. Do I have a compelling reason to find a partner? Everyone loves company, but loneliness is a weak reason to seek a partner. In many regards a partnership is more intense than a marriage because you spend all day awake with your partner instead of all night asleep with your significant other. Why even consider a partner? Here are some worthy reasons:
- new sources of needed capital;
- the need for someone with specific skills or knowledge, such as Web development, business development, or marketing;
- the need for someone with familiarity or deep connections in an industry or niche you want to crack;
- as the first step toward growing a business beyond the narrow confines allowed by sole proprietorship.
Many people see partnerships as a money-saving strategy. After all, why pay the expense of two offices and brands when you can share the expense of one? If that’s the case, explore office sharing arrangements or other co-working alternatives before you merge simply to save a few bucks. With a partnership, you’ll pay in sweat what you don’t pay in dollars, guaranteed.
Selecting a friend as a partner, as enticing as the idea may sound, also isn’t the smartest choice. Unless your friend satisfies one of the criteria above or brings to the table something of great value other than a warm fuzzy feeling, think twice before taking the plunge.
3. Does my potential partner share my vision? Where do you want your business to grow tomorrow? Don’t assume your potential partner wants the same thing. Detail your goals and ask your potential partner to do the same.
Are you interested in becoming a high-end boutique design firm or a design factory with lots of employees? Do you want to introduce new products or services or extend existing offerings to new industries? Print or the Web? Do you want to work 60 hours a week or 35? Will your customers be Fortune 1000 companies or family businesses? Can the family dog come to work or not?
If it seems you’re on the same wavelength, than start working together on a business plan that lays out the partnership’s goals including specific milestones, along with a clear explanation of the major responsibilities of each partner. Be as specific as possible, if for no other reason than to encourage dialogue before the daily grind of work makes it impossible to talk through potential areas of conflict.
4. Is my partner willing to give what it takes? Here’s the big enchilada. Many people enter into partnerships because they think it will reduce their own workload or, worse, to take a free ride on someone else’s coattails. You want someone who is willing — and has a proven track record — of putting the time and energy into the business necessary to make it work. If your partner ends up being a drain, you will suffer emotionally and financially. You’ll also put your reputation at risk, as your clients will soon become your partner’s clients. Do your due diligence on your potential partner, just as you would on any investment in your future.
5. Do we have an exit strategy? There’s another old business adage: There are two types of partnerships – those that are forming and those that are breaking up. A break up may not be inevitable but it’s certainly possible, and therefore a clear exit agreement should be in place before you establish your new entity, be it a partnership, corporation, or other legal form of organization.
Have your attorney draw up a formal agreement covering every eventuality you, your potential partner, and the attorney can dream up, including, heaven forbid, death and disability. Discuss and agree on the division of profits, clients, and assets.
As much as we’d like it to be so, business relationships rarely end on a smooth note. All those initial good intentions vanish in a puff of angry smoke as the partnership disintegrates. Therefore, as inauspicious as it may seem right now, it’s essential that you focus on the end even before you begin what hopefully will be a fruitful relationship.
And don’t forget to draw up an exit plan for retirement, because, who knows, maybe you’ll strike it rich and find a beach hacienda more appealing than 70 hours a week in front of a computer screen. We should all be so lucky.
