If you’ve ever had a roommate and/or been married, you know how hard it can be for two people to work together for what is (hopefully) a mutually beneficial goal. Whether it’s to save money on rent, or simply because you love and want to build a life with someone, we enter into these interpersonal arrangements with the best of intentions to compromise with and respect our partner to achieve the best possible outcome.
Yet, based on the estimated 50% divorce rate in America, those intentions clearly don’t always pan out.
Why, then, do we think that a business partnership would be any different?
When you think about it, business partnerships take the same level of commitment and compromise to work as marriage or living together. And yet almost 70% of them face a similar fate of failure. I believe that this ultimate failure – like any relationship – can be due in large part to not asking the right questions.
So aside from analyzing the common pros and cons of forming a partnership, I recommend also asking yourself a series of questions that will help you determine what both you AND your potential partner can do to address hot button topics upfront and set realistic expectations for a balanced relationship.
First, let’s take a look at the essential pros and cons of a business partnership.
PROS
- Your partner has skills, knowledge, connections or other beneficial offerings that you do not.
- You don’t have to go it alone. Having someone to weather the storm of starting a new business can provide confidence and camaraderie.
- The workload is divided, thus it’s easier to accomplish more.
- Creativity or innovation can be sparked by having another perspective / sounding board.
CONS
- Joint decision-making can be long and tedious, it will lead to disagreements and possible resentment, and it can ruin relationships.
- You have to share profits or stock, and this can get ugly when you have to jointly decide how to spend or reinvest to grow the business.
- Work ethic and responsibility are subjective. Again, a recipe for resentment.
- You may be liable for your partner’s actions or activities.
Now, here are the questions you can ask to determine whether a partnership is right for you.
1. Are you a team player?
There’s nothing wrong in admitting you prefer to work alone. In fact, it’s very common for entrepreneurs to have lone-wolf tendencies.
However, overlooking this self-evaluation will lead to major problems down the road, when you resent not being able to make decisions on your own. If both you and your partner lack the ability to be a team player, your power struggle will undermine and eventually destroy any goodwill you may have.
Be honest about where you fall on the self-sufficiency scale and ask your potential partner to do the same.
Also, don’t forget to consider the most obvious question: do you even need a partner? Unless you have to bring someone on board for financial capital or for the skills they possess that are not easily acquirable, chances are you can do this on your own.
2. Can you accept differences among skills and roles?
Ideally, the division of labor will be divvied up into ways that play up your unique skillsets. For instance, one of you may handle clients, while the other handles the books. This division is one of the reasons people choose partnerships: to each bring your complementary skills together in a yin yang balancing act.
But what happens when that division leaves one partner feeling like they are working harder or more hours? Or not getting their due recognition? Or more passionate then the other? Or any other myriad way that feelings of inequality can rear their ugly head?
What once seemed like a complementary style may now seem like a partner with differing levels of passion, drive, or working hours than you.
Can you recognize contributions that may look different on the surface, but bring equal value to the table? Or what will you do if there is genuinely an uneven distribution of work?
3. Do you have similar values and have you set clear expectations?
Choosing a partner should be like a job interview: you should be looking for the “best fit” candidate that shares your values and vision for the business. This may seem like a no-brainer, but it’s easy to get caught up in the excitement having a great idea or great chemistry together and forgetting to perform this exercise in due diligence (ask anyone who’s ever started a friend or family partnership – and failed).
Having this pointed and deliberate conversation can help identify the right partner and set clear expectations from the outset.
Ask your potential partner interview-like questions to help guide both of you toward a more grounded, realistic approach to how your business will run:
- How do you handle adversity?
- Where do you see yourself in five years? In ten?
- How comfortable are you with risk?
- Tell me about how you motivate yourself.
- Can I contact your previous business associates?
Bottom Line
Business partnerships, just like any other partnership, rely on carefully selecting the right partner that will bring balance and value to the table…and then is continuously committed to working hard every day to meet shared visions and expectations.
Choosing to form a partnership may not be the best decision for everyone or for every situation, but it can be very beneficial if entered into for the right reasons and with a realistic understanding of both the positive gains and negative drawbacks.
If you decide to go down this path, it will be essential to build an operating agreement. Legal and financial professionals can help to set up protections for all parties involved, through good times and bad. Again, just like any relationship, the goal should be for all partners to do well and, if and when it’s time to part ways, for an amicable split that ends with dignity and respect.
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