Wikipedia’s entry on partnership begins with “Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace.” The real nugget in this is the term social beings – no matter what kind of partnership you might be contemplating entering into, or be lucky enough to have already established – bottom line a partnership is a relationship, whether a commercial one or a personal one, it’s the relationship that needs to work to achieve success.
In a business context there are plenty of great posts out there on the pros and cons of working as a “solopreneur” vs having a business partner, for example Rebekah Campbell from Posse who is a sole founder wrote a fabulous post on the pros & cons of each, and this article on the loneliness of starting up as a sole founder provides another interesting perspective. Today however I am going to talk about what makes a good business ownership partnership work rather than why you might enter into one.
Shane and I are lucky enough to have known each other for a very long time, we’ve worked together before and had loads of hair brained schemes before we launched into business together. As a result we have a strong understanding of each others strengths, weaknesses, how to wind each other up and importantly how to argue + move on quickly. Not every business partnership has the luxury of having known each other for as long as we have but there are a few very important ingredients for a successful partnership that you can identify quickly:
- Moral and Ethical basis = at a core foundation of your relationship for it to really work both (or all) business partners need to share the same moral and ethical basis. Knowing the other person’s bottom line is really important, if these don’t line up you will have problems down the track. For instance if one partner wants to run a pyramid scheme and the other wants to give 30% of your profits to charity, or one wants to trade in coal while the other wants to save the planet. Our bottom line is “don’t be dodgy” we live by that statement and it is reflected in OptimalBI’s core values.
- Trust = it’s cliche to say you need to trust your business partner, trust them with your shared resources (usually $$), trust them to do their job not stepping all over their role or responsibilities, trust them to make decisions for you when it’s necessary (and respect them enough to live with that decision) but it’s really important. This trust needs to extend to your significant others too – if your life partner doesn’t trust your business partner then you will have some real issues to deal with at home too.
- Philosophy towards money = business partners usually have complimentary skills and styles, that’s why they work well together, but another thing you should be on the same page with is your philosophy towards money. I’m not talking about discretionary spending or expenses rather how money influences you both, whether it’s a driver or a bi-product of owning this business? is being generous important (generous with your staff and charities for instance) or is your motivation to get as much cash in your pocket as you possibly can? Philosophy towards money breaks up marriages and can equally cause strong rifts in any working business relationship.
- Exit Strategy = you don’t need to write it down or have an exit plan but sharing a common view of what your ultimate exit strategy might be is also really important, one partner might be building a business for them to be employed by for the rest of their lives while the other wants to sell and make a quick buck, huge difference.
Entering into a business partnership is a long term commitment, seriously you might own this business for 10 years, and if you are starting up your new business partner is someone you will spend many hours working with so establishing a good framework for decision making and communicating enough (think over communicate) is vital. If there are more then 2 partners this is magnified so make sure all of you are on the same page, we had a 3rd partner for a short time and quickly found Shane and I were communicating & moving forward at a different pace leaving our other partner behind – something we recognised and resolved quite quickly.
For me I couldn’t do this alone because I need to bounce everything of others to validate my thoughts and ideas, we don’t always agree (make that don’t often agree) but that’s part of the fun! Next chapter in this series is on Joint Ventures. Happy sharing. Vic.