The continuing fights between Mark Zuckerberg and the Winklevoss twins over their share of Facebook shows choosing partners to help you establish, fund and grow a venture is one of the toughest things in business.
Good partners are a formidable combination. Together two, three or more well matched businesses partners with complementary skills can give a startup huge advantages. Warren Buffet and Charlie Munger at Berkshire Hathaway are a good example of business partners whose skills and personalities build on each other.
Sadly those perfect partnerships are rare and all too often the differing personalities coupled with the financial and emotional strain of starting a business lead to the partners falling out. So what is it that makes the perfect business relationship?
Complementary strengths
All of us have weaknesses, in business these can manifest themselves in things like an inability to see bigger trends, too much focus on detail and – probably the most common of all – a boredom with doing paperwork and accounts.
The best partnerships are where each party adds something to the team, one partner might do the “big picture” strategic work while another focuses on the detail orientated operations. If you can find one that loves doing the books, marry them and do everything you can to retain them in your business.
Tolerance of weaknesses
The flip side of having complementary skills is that each partner has to be tolerant of the others’ weak spots. In any relationship, business or personal, that understanding of a partners’ weaknesses is essential to success.
Respect
All of the partners have to respect each others views and strengths. The moment one partner feels they are not being valued, even if it is only a perceived lack of respect, the relationship is heading for the rocks.
Equal contributions
In many small businesses, the biggest cause of friction is one partner not putting in an equal contribution. If all parties aren’t putting in their fair share of labour or capital then the arrangement is going to hit problems, particularly if the venture is successful as we’ve seen with the Facebook disputes.
Unequal contributions hurt, particularly in small businesses where one partner may have contributed a far greater slice of their capital or time than others. This is often the problem where some of the partners are working full time on the business while others have corporate jobs and can’t put in the hours required to be equal partners.
Some friends of mine had a falling out over what was looking to be a successful business when one of them found they couldn’t continue to juggle a successful corporate career with a running a start up as a part time job. The others in the partnership were running the new venture full time and were severely unimpressed with the threat to several years hard work on their part when they too could have been chasing a big business salary.
The worse possible small business partnership is where one of the partners subsidises the business from their other income, another friend of mine subsidised a cleaning business for two years while his partner forgot to put in invoices or quote for new work. When the business folded, my friend was out much of his savings from those two years.
Mismatch of expectations
People go into business for all sorts of reasons; some for love, a few to build empires and others with the expectation of becoming billionaires. Many of us find ourselves building businesses because we’re unemployable anywhere else. Having a common vision of where you want to the business to go is also essential or again the partnership will fall apart over those disagreements, often at the worst possible time.
A business partnership is very much like a marriage and can be just as expensive to undo, choosing the right business partners can make the difference between a middling small enterprise and a fantastic success. The right partners are a great asset to your business, but choose carefully.
To your point that “A business partnership is very much like a marriage”, after 20 years of such ‘marriages’, a stand-out key success factor for me in getting the relationship right is to sort out the terms of ‘divorce’ before walking down the commercial aisle.
This is the grand crap test and makes sure all of the tough questions, many of which you allude to Paul, are worked through before the dress is bought and the suit is pressed.
Best, Robin 🙂
Helping you increase sales
Good point Robin, not having a proper shareholders or partnership agreement is really common in many business ventures and I’d suggest it’s probably one of the biggest causes of conflict when one of the founders wants to leave.
Some good points, Paul. In my obviously limited experience, I’ve found that the most common success profile in entrepreneurial situations is the team of two, where one is the ‘ideas man’ and the other is the ‘bean counter.’ This seems to have a much higher success rate than the sole inspirational leader, larger teams, or more equally-matched partnerships.
The critical success factor seems to be in each partner actively valuing the contribution of the other and realising that their contribution would be worth little without the very different contributions of their partner, as their contributions multiply rather than add together. Hence, one person putting in more hours or feeling more stress is not a metric of the relative or absolute importance of their work to the other.
I’m not sure I agree about the importance of putting the divorce settlement in place before the wedding, as I’ve seen too many people spend inordinate amounts of time arguing about how to divide up the pie – the the point that they never get around to making any pie at all. I think it’s often better to get started and focused on what you are trying to achieve, and once you establish a bit of traction and are starting to build something, then you can think about who owns what. This is often instigated by the need to take on outside funding or other resources, and that’s often a very good point to address that question, after you have some experience with each other.
Another word of caution that I would offer is to be careful of the marriage analogy, as the business does not necessarily need to be based on a strong personal relationship. You don’t have to vacation together and you don’t actually have to like each other – you just have to compliment each other, respect each other, and maintain a mutually high level of motivation to achieve your goal together. Anything else is a bonus.
Cheers,
Paul.Hauck@ICTStrategicServices.com.au
Principal
Thanks for those wise words, Paul.
Your point about the limits of an analogy between a marriage and a business partnership is well taken and illustrates there are limits to an analogy.
Focusing on dividing the pie before you’ve baked it is also a very good point. The main focus when starting a business is to grow it, everything else seems to be a distraction. Although it’s still a good idea to have given some thought to what happens should one founder decide to move on, falls under a bus or fails to perform.
Paul – your site seems to be rejecting my URL from the ‘website’ field, though it didn’t tell me why, and just says ‘please enter a valid URL.’ I tried http://www.ICTStrategicServices.com.au, then just deleted it when it didn’t work.
Cheers,
Paul