One of the most important decisions you’ll make in the early life of your business start-up is whether to go it alone, or partner with someone else. Few things can determine the success or failure of a start-up like the quality of its business partnerships. In this article, I’ll take you through some of the critical considerations to make, and the terrible traps to avoid in partnerships, but first
Why bother partnering with anyone?
The whole point of a partnership is that it should make the accomplishing of a goal easier. It takes a multitude of things to build a successful business and its very likely you don’t have them all, especially in these early days. So Remember this: Whatever you lack right now, someone else already has, and they will give it to you, if you’ll make it worth their while.
- Finances/ start-up capital
- Skills and knowledge
- Connections and important relationships
- credibility or a reputable brand
- Leadership and vision
- and other things
A partnership allows you to leverage what the other party has to accomplish your goal in a win/win scenario.
Of course, not all partnerships succeed but Sometimes, that has less to do with the people involved as much as the arrangement you’ve made. Here are three things to be aware of;
A partnership only works when the other parties contribution is equal to, or greater than his share of the reward. Imagine you’re able on your own, to create a small business that will earn you $2000 a month. If you then invite a partner in for a 50% share, who only brings in $1000 worth of value to the business, you’ve made a loss. Where as before you could have earned $2000, now you’re earning a combined $3000 and when divided between the two of you puts just $1500 in your pocket. You’ve made a bad decision.
A partnership only works when you’re not simply duplicating yourself. Unless you specifically need another person with exactly your skill set or contribution, a partnership doesn’t make sense. Two people with exactly the same skill set, doing the same things, will not often generate enough increased value in the business to surpass the rewards one would get going it alone.
What you’re really looking for is a partner who can compliment you, not duplicate you. You have the money, he has the know how. Or he has the connections and you have the skills…that sort of thing. In my experience complementary partnerships are far more powerful than duplication scenarios.
A Partnership Only Works When You Cant Just As Easily Hire or rent what you lack. Hiring is a lot cheaper than partnering and often a smarter route. If you’re looking for a particular skill set, or a certain type of knowledge, or just more hands on deck, a business partnership may not be required at all, if you have the ability to hire it instead. Not everything can be hired. leadership especially is hard to hire, but if you can, it’s often a lot smarter than giving away ownership in the business early on.
The above are mostly to do with situations, situations in which it is or is not useful to form a business partnership. However even in ideal circumstances, there are certain types of people you should NEVER partner with. Stay away from this sort of partner…
Don’t Partner The Guy you can’t trust. If you need a contract to trust someone, don’t do it! Your contract should outline what you already trust each other to do. It should not be the foundation of the trust itself. If you think a contract will protect you from someone who has bad intentions to begin with, think again.
Don’t Partner The Guy Who Is Looking Out Only For Himself. Pay attention when you’re negotiating and formulating a partnership. Both parties should naturally want a win win. If you find yourself wrestling with someone who is thinking only of his own win…DON’T. If you go ahead, chances are, he will find a way to mess with you eventually.
Don’t Partner the Guy Who Is Destined To Fail. How do you know when someone is destined to fail in business? Listen to them. The guy who talks failure and defeat is destined to fail. In the early days of your business start-up, you’re going to face hard times, make lots of mistakes – that’s part of the process. It’s going to be harder and take longer than expected…sometimes the only thing you’re going to have is the attitude that says “we can…lets do it”. In the midst the inevitable challenges you’re going to face, the last thing you want around you is a losing attitude. It almost always guarantees failure.
Don’t Partner An Employee Minded Person. Make no mistake, there is a world of difference between being a business owner and business employee. An employee can not operate in the entrepreneurial world and survive. Now to be clear, by employee, i don’t mean someone who is employed – there are lots of people who are presently employed, but with the mentality of a business owner. I mean someone who needs a boss to think for him and tell him what to do. Unless you’re prepared to be your partners boss, don’t partner them.
An entrepreneur needs to come with ‘Can Do’ already included in the box. An entrepreneur isn’t waiting to be told to study trends and look for opportunities – it’s his mindset. An entrepreneur isn’t waiting to be told to take the initiative, He was like that before you met him! An entrepreneur isn’t the guy who gets discouraged at the first obstacle – don’t partner that guy.
Listen, in thinking about partnerships, be honest about your strengths and weaknesses – at least to yourself. Too many have failed to partner with someone who would’ve helped because they over estimated themselves and ignored the facts on the ground. You know the old saying “better to have 10% of an Elephant than 100% of nothing”.
Lastly, i have learned that no matter who you partner, it’s going to take a while to find your rhythm. Different people have different work styles, personalities, strengths and weaknesses. Don’t try to make the other person like you, rather learn how to get the most out of who they are and what they do best.
Do you have a partnership experience you’d like to share? a success or failure story with a lesson? Please share in the comments below