As Seen In
Collaboration. Leveraging resources. Alliances. The new business model in tough economic times is all about “partnering,” and nowhere do those issues get played out with greater intensity than with business partners. Millions of entrepreneurs have started – or joined — a company with more than one owner. But according to AssociatedContent.com, up to 70% of all business partnerships do not last. So how can you make sure that your company is one of the success stories?
Take to heart these two lessons:
- Know what you truly need from a business partner
- When in doubt, revisit #1
How many stories have you heard of the whirlwind romance that traversed seas and continents, only to end up in disappointment (and divorce) before the ink was dry on the marriage license? The same thing happens to entrepreneurs. They may take on the first business partner who promises a happily ever after—as if the partner were a lifeboat to rescue them from drowning in recessionary times. Or the savior who staved off loneliness. So they rush into forming a business (or working together) without seeing if they are really compatible for the long haul. And like marriage, once you’re “in it,” it takes blood, sweat, and tears –not to mention money and lawyers — to undo it.
Erica learned this the hard way. She was eager for a lifeline to give her advertising and marketing company a boost, so she took on a much older partner, Howard, who had a lot of clout in the field. They seemed to be aligned on how they would handle clients and be compensated. Erica so desperately wanted the contacts that she thought Howard would bring to the business, that she didn’t look closely at Howard’s work habits, the quality of the contacts, and the long-term goals for growth. When Erica wanted to include new/social media for their clients and Howard kept downplaying the need to “advertize on the computer” (instead of “market on the Internet”), Erica began to realize that she had hitched her wagon to an albatross.
So what should you look at before deciding to go into business with someone else?
- Why do you need to do this? What’s your motivation? Are you lonely working alone? Does this person really offer another skill set or opportunities that you don’t have or couldn’t get another way? Think creatively about whether you can get your real needs met in an employee or outsourced contractor situation . . . or by developing a mastermind alliance.
- Look at your own strengths and weaknesses. Like #1, above, it helps to know yourself and how you need the other person to contribute. Be brutal—this is not the place to sugar-coat. Are you looking for a financial partner? Someone to share the workload? Do you need a creative mind to balance your managerial one? What of your respective strengths and weaknesses overlap?
- Open your eyes—or use someone else’s. As with personal relationships, we may turn a blind eye toward certain behaviors because we really just want the relationship to work out . . . for reasons having nothing to do with the other person. Erica closed her eyes to the possibility that Howard might not have the creativity (or desire to learn new things) because all she saw was a contact list. She also didn’t carefully analyze #2—what the full range of her needs were. She needed an equal partner to roll up his sleeves with her, as well as bring something to the table she didn’t already have. Howard, it turned out, was looking to ease into retirement. Engaging a consultant to help with an evaluation process could have given Erica more information for making this important decision. Many entrepreneurs don’t think through the possible permutations and options in starting a business with another. That’s why having advisors on board – legal, accounting, coaching, etc. – are so important in guiding you through this process. Putting your observations and desires in writing helps crystallize your thinking about the relationship.
- Opportunity knocks . . . again and again and again. Entrepreneurs often feel pressured to start a business right away because they might lose a competitive advantage, or the potential business partner might walk away. In some cases, you might be right that you can’t wait forever. Nevertheless, that doesn’t mean that rushing into a venture with this new person is right for you, either.
- The proof is in the pudding. Let’s say a potential business partner boasts that she can double the income of your company. Where’s the beef? What information or evidence is she sharing with you to back up that claim? I could tell you that I have a bridge to sell you—cheap—but unless I can show you the title documents, you’d better not pull out your checkbook! Similarly, how do you know your potential partner is “all that”? Have you worked with her in the past? Checked references?
Give your business partnership a fighting chance of success by taking your time to know that you want—from yourself and others. When you’re clear about your needs, it’s easy to tell whether you’re aligning with Mr. Right . . . or Mr. Right Now.