Shannon & I were recently interviewed on the secret behind our “Successful Business Partnership” for MomCafe’s cool new On Demand series.
I love talking about our partnership because business partnerships are not easy and it can go so horribly wrong. It takes work – just like any relationship. I have always said that a business partnership is the same as a marriage, without the sex! Your biggest areas of conflict will come with communication and finances – knowing this from the outset is important.
Even with a perfect business partner, you can't plan for everything! Like getting pregnant weeks apart! (2008)
So if you’re thinking of either starting a new business with a partner OR bringing a partner into your existing business here are the top 8 things to think about when choosing your partner:
- Communication: Keeping the lines of communication open regardless of the fact that we may be half a world away from each other at any given time is essential. It isn’t the physical distance that has been the challenge for Shannon and I, more the distance that gets created when we both are really busy doing our things with the businesses and don’t take the time to connect. This has affected us both as business partners and as friends.
- Attention to Finances. Know what the investing and spending goals are of your business partner. If you realize a profit, do you agree what you will do with it? Will you reinvest, will you issue dividends? I know of a business partnership where this was not discussed at the outset and the partners had very different financial views. One partner believed in leveraging the business as much as possible to invest in other sources of income, and the other business partner wanted to save all the profit in the business so they were prepared for economic changes. Shannon & I agreed from the outset that we wanted to always have 6 months of burn as savings for our company so that we were always safe.
- Different skill sets: As Michael Gerber says in his popular E-Myth book, one plus one should equal three. Don’t partner up with someone who’s just like you. Shannon is strong in all the areas where I am weak.
- Equity and Equality: The biggest conflict can come from ‘she’s not doing as much/ working as hard as me’. Our advice? Assign areas of responsibility and then get out of the way. We work in a ROWE (Results Only Work Environment) so it’s not about what hours you work, but about being accountable for your deliverables.
- Growing together and being honest about your life plan: The fact is, for women especially, life will have a greater chance of interfering with our business plans. You can’t predict everything, but if you’re planning a major life change (a move, kids) you need to include your business partner in your decision making.
- Shared Values: I’ve seen more partnerships fail because of a lack of trust. Make sure your core values are aligned – and they continue to be aligned as you grown and change.
- Respect. Our respect for each other is the key to our success. Although we’ve frustrated each other and haven’t always seen eye to eye, Shannon has always had my utmost respect, which she earned.
- Know your Exit Plan. Always enter a partnership with the end in mind. Know what you both ideally want to build and when you would want to get out. And in case things do go wrong, make sure before you start that you have the proper contracts to make dissolving as clean as possible.
Everything keeps changing all the time with our lives and our business (and that’s just life!). Remember that money and fear–two things you deal with constantly when running a business–bring out the worst in people. So knowing this combined with being respectful and accountable will ensure your partnership success!
We’d love to hear your thoughts – the good, the bad, the synergy – on business partnerships! @pretirementlife or comment below!
