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Partnering – the Good, the Bad, and the Ugly

Guest post by: Larry Mandelberg

Article Overview: Partnering is a common approach to launching or growing a business. Some people swear by it, some swear about it. While partnering is a valuable tool, far too many entrepreneurs dive into partnerships without fully understanding their complexities. In this column, Mandelberg talks about the critical to-do's and the common uh-oh's entrepreneurs seem to make over and over again. Learn how to escape from the pull of bad partnerships and create faster, bigger, sustainable success using partnerships the right way.

Partnering – the Good, the Bad, and the Ugly

Partnering is a common approach to launching or growing a business. Some people swear by it, some swear about it. While partnering is a valuable tool, far too many entrepreneurs dive into a partnership without fully understanding the complexities.

The best thing that can happen in a partnership is professional and financial success. On the other end of the scale you find failure, loss of cash and ruined relationships.

Perhaps the worst outcome is when partnering leads to the death of passion through a routine grind of hard, unrewarding work and little to no profit.

Janice Whiting, Principal of Performance Enhancements Group, LLC has had both good and bad experiences with partners. Speaking about the bad one, "It began with lots of passion and excitement; it ended up destroying a great friendship. Bottom line, we didn't have the same vision for the company."

Clearly, having passion and a great product or service is not enough to ensure success. If you only get one bit of value out of this column, know that bringing in a partner, regardless of the legal structure, can't work unless the partner shares your vision and has strengths that offset your weaknesses.

Only then can partnering effectively increase your odds of success and reduce risk. Partnering without that shared vision and a balanced mix of strengths and weaknesses gives control to friendship and common interests - and that's not good for the business.

This means no friends or family. In my experience, the risk of harm to those relationships is just too high.

There are many ways to create a partnership:

• Through a formal, legal business entity
• Through an informal relationship based on synergies and matching strength to weakness.
• By recruiting an investor
• By creating an Advisory Board
• On a project basis

As with most things in business, there are common rewards and dangers, and proven ways to avoid them.

The Benefits of Partnering



Finding the right partner can help overcome major roadblocks. Christine Giri, principal of Time Tamer Consulting explained why her partnering experience was successful. "We valued the other person's opinion, we divided up the work according to our strengths, and met regularly with two other successful women who were partners in their business to share what we are doing and vice versa"

A good partnership allows each party to focus on their strengths, avoid the things they don't like or do well, and provides resources to fill in the gaps.

When you do the homework, identify the critical skills needed, define your ideal future state, and find good people that share your vision and values, you can make magic. And the world is full of these examples. Ben and Jerry's, Proctor and Gamble, Google, and Hewlett Packard are just a few.

The Risk of Partnering



Failure to discuss all aspects of your partnership, both long term and short term, is the most common reason for the failure of a partnership. You will always have some differences in belief, approach or philosophy. If you don't discuss them before you enter into the partnership, things can get ugly very quickly. Be sure you and your partner talk through all aspects of your potential new relationship before you engage, not after.

The second common mistake is failing write a buy-sell agreement before you engage with a partner. When things don't work out, anger and mistrust take over and it feels like the world is conspiring to make your life miserable. The buy-sell agreement should clearly define what will happen if you ever need to modify, dissolve or sell the partnership. And it's the only way to make sure you will remain friends if things don't work out.

Why Partner if it's so Difficult?



Entering into a partnership is more complicated and difficult than entering into a marriage. According to Greg Roquet, President of Murphy Business Brokerage - Northern California, "...make sure you "date" your partner prior to getting married as partners."

Greg's analogy of partnership as a marriage has a lot of truth. For the first few years, you'll be spending more time with your business partner than your spouse. You'll also be sharing finances and decisions. Making sure your spouse understands the commitment you are going to make to your business partner will help your home life. Making sure you and your business partner come to a mutual understanding of the commitment each will make to the business is just as critical.

If having a partner is so tough, why bother with it? Because you can share the risk and leverage strength against weakness. After all, two minds are better than one. If you have critical areas of weakness you would not want to trust to an employee, a partner is your best option.

What makes a partnership succeed? Success begins with finding someone you like, trust, and share similar values with. Success grows when one partners' strength serve the other's weakness. Success becomes sustainable when you document process, define roles and responsibilities, and find a shared vision for the future.

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Article Tags: growing a business, partnership, partnerships



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