Why A Partnership?
There are two primary reasons why one should have a partner. Either you need someone to share the work load or you need someone to share the cost and the investment until your business is running profitably. All other reasons are secondary.A few other reasons people use to justify having partners are: emotional and psychological reinforcement, different or complementary skill sets, scalability, trust, fun, dependability, sharing the risk, sharing authority, and time off. There are still more creative reasons many people think of to have or want a partner but each one of these really comes back to sharing the work load or sharing the cost.
More…Partnerships are complex and intense relationships not unlike marriages. Successful partners control their emotions, resolve conflicts, and quickly learn they must compromise to thrive and survive. In most cases, close personal relationships with either friends or family members who become partners are generally compromised by the stress and difficulty involved in making serious business and financial decisions.
If partners are fortunate, their previous social relationships with each other are compromised only a little but unfortunately this is seldom the case. If possible, serious consideration when selecting a partner should be given to respected business associates or business acquaintances instead of family members or close friends.
Two is company, three is a crowd. This is an old adage that may be particularly apropos to partnerships and should be heeded indeed. With three partners, the potential for ongoing conflict increases unless one partner has a controlling interest. Often times, due to personality, philosophical, or business differences the same two partners may consistently team up to outvote the remaining partner. Two equal partners by definition generally work towards compromise and finding workable solutions with one another because the alternative may cause the business or the partnership to fail.
No matter who your partner or partners are, certain safeguards and best business practices should to be closely considered and adhered to in order to better avoid potential catastrophic conflicts.
• Have a sound and detailed business plan that also defines each partners responsibilities
• Agree on a mechanism for mediation or a plan to break a voting deadlock
• Have a buyout formula or plan of action in the event of death, major illness, dispute, and the like, such as life and disability insurance.
• Agree on a mechanism to dissolve the partnership if necessary
In order for business partnerships to succeed partners must be committed to working together as a team with a common focus and a common goal as well as sharing mutual dedication to achieving success. It is wise to understand and consider the career background of each prospective partner. Consider whether they have experience working in teams where success was achieved, which may indicate having experience with conflict resolution.
Were they independent achievers and given autonomy and freedom in previous jobs where only results counted? Do not overlook past performance as an important indicator. As a wise man once said “those of us who ignore the lessons of history are doomed to repeat the failures of the past.”
Partnerships are teams and therefore conflict is inevitable. Those who prepare for and are able to successfully bridge conflicts have the best chance of realizing successful, harmonious and profitable partnerships.