Starting a business is no small endeavor, especially if you're doing it alone. That's which why many entrepreneurs choose to partner up. Having a partner helps make starting a business seem less risky because it gives you two or more brains instead of one as you go along your journey. The same goes for joint ventures and other forms of business partnerships. And there have been some fantastic business partner success stories over the years like Pitney & Bowes, Hewlett & Packard and even Ben & Jerry.
But along with the successes come plenty of partnership horror stories. In fact, there are many parallels between going into business with someone and getting married. Even the statistics aren't even as good as the success rate of marriage, where just about half of all of the relationships fail over time.
What that means is that when it comes to forging a business partnership, there are some lessons you can apply from the world of marriage to help improve your chances for success. Here are some tips to consider:
1. Be Thoughtful About Who You Partner With.
Have you ever met anyone who got married after just meeting someone? That kind of thing only happens in the movies. Why? Because we all want to spend time dating someone and getting to know them before we get engaged to them. You should have the same attitude when it comes to choosing a business partner. Don't jump into anything too quickly. Take your time to vet the other person and make sure you have the kind of chemistry that will last through the good times - and especially the bad ones - before you make the commitment in time and treasure to start a business together.
2. Plan For The Break-up.
Nobody likes to think their relationship will fail, but the statistics are sobering: more than half of all partnerships, end in divorce. That means that right from the start, when you and your business partner are crafting a partnership agreement, you need to be planning on how you will end your relationship on good terms. Think of it like a pre-nuptial agreement for your business. That means detailing out how you will value the business when one partner wants out and how the buy-out will be structured.
If you don't have this agreement in place and you hit an impasse in your relationship, you will find that things will get ugly - and fast. That's because the incentives are all wrong. The partner who wants to leave the business wants to keep as much as he can while the partner who is staying wants to pay out only enough that it won't impact the business. If you don't have a way to structure that deal until emotions are high, you not only risk further damaging your relationship, you might also put the entire health of the business at risk as well.
I know of one example where two partners in a management-consulting firm went through a buy-out where they didn't have an agreement in place when they started the business. The end result was that the partner who stayed with the business was forced to pay a premium to buy out his partner - which left his business with a massive debt burden for the next six years. That could have been avoided with better planning at the start.
While it might seem strange to plan for your partnership breakup from day one, you'll be happy you did it later on.
3. Work At It.
People's objectives and goals in life change over time. That's as true in marriage as it is in business. That means it's inevitable that at some point, your partner's goals will begin to differ from yours. The key to overcoming those changes if you don't want to end your partnership is to constantly work on your communication and on setting clear expectations for each other.
I met the principals at a financial services firm where the two partners faced this very dynamic. One partner was solely focused on growing the firm while the other partner was comfortable with the level of wealth they had already achieved. While one partner was playing to win, the other was playing not to lose. It took extended discussions and concessions to find a way to move forward that keep them both happy.
They key is that they discuss those differences and learn to compromise on solutions that work equally well for both of them moving forward - or they could face the prospect of a partnership divorce.
4. If All Else Fails, Get A Counselor.
If you and a partner reach a point where your interests and objectives are diverging fast, it can become very challenging to work out those differences by yourselves. That's when it can really make sense to bring in someone to help facilitate your conversations similar to how a marriage counselor might work. In the case of a business partnership, you could turn to a mentor, a board member, or even a third party facilitator who could sit down and listen to the issues objectively. While those discussions might result in a decision to break up the partnership, a counselor could help you reach that point much more amicably and with less emotion than you could on your own.
The key point is that if you're thinking about starting a business with a partner, head into that relationship with your eyes open because while you might be mitigating risk on one end, you're also increasing it on another.