During some struggles with a business partner in my first venture, I received some sage advice from our largest client who said “Partnerships should come in odd numbers, and three is too many.”
Most statistics show that up to 70% of business partnerships ultimately fail. However, I have seen some tremendous success between partners who seemingly beat the odds. While most successful businesses do consist of a Visionary (the great salesman, relationship builder, and one who sees the “big picture”) and an Integrator (the one who has to execute the details and manage the team), they are not always partners.
When looking at both my past experience and those who manage to beat the odds, I came across the following tidbits that are more likely to tilt the scale in your favor:
1. One leader.
Partners need defined roles and there has to ultimately be a final decision-maker and leader in the company with the power and support of the other.
2. One vision.
Partners who have different visions of where the company is headed and how to get there are much more likely to give conflicting direction to your team. Not having your entire company rowing the boat in the same direction is detrimental to growth. Have a weekly meeting to make sure you are always on the same page.
3. Partners need jobs.
Many partnerships can more clearly be defined when the role of each partner is separated from the equity stake each has in the business. Inevitably, one partner will invest more “sweat equity” than the other. This can lead to resentment over time if each is being compensated equally. However, with each partner having a clearly defined role and agreeing to the compensation of that role, ownership interest in the company becomes secondary.
4. Disagree in private, put on a unified face in public.
Partners will have disagreements. Unless it is something that is part of a leadership team discussion, it should not be on display. Best case is that it makes for an uncomfortable working environment. Worst case is a company split when they feel obligated to take sides.
5. Have an exit plan.
When times are great, nobody considers the ending. Have a plan up front on what to do in the event of a partner split. The chance is that eventually there will be an impasse with vision, a partner will want to exit, or one party may be affected by illness or death. Have a legal plan on how to value the company, create an affordable buyout structure, and any other details in advance. You may never need it, but you will be eternally grateful if you do.