SBX 23: How To Find The Right Business Partner
The only thing that might be uglier than a divorce is a business partnership gone bad.
Business partnerships can be awesome. Steve Jobs & Steve Wozniak, Warren Buffet & Charlie Munger, Mike Monroe & Gary Shouldis and Darryl Hall & John Oats are just a few examples of the magic that can happen when two forces combine to create something bigger than one could have accomplished on their own.
When you form a partnership, it should be a 2+2=6 (or 10!) equation. Both of you should be able to bring your talents to the table and combined, create something bigger than you could have done alone. That’s the power of a great partnership.
But unfortunately, it doesn’t always result in a happy ending.
Just like divorce rates, partnership breakups are quite common, often resulting in the ruin (or near ruin) of a business. When there are fundamental disagreements or serious money issues, the stakes and emotions can get high. Once great friends can turn on each other and bring the entire company down with them.
So what can you do if you are considering getting into a business partnership? You listen to this episode of course!
Listen and Learn…
- Learn the ins and outs of partnerships and how to approach one
- Why getting into a partnerships with people you really like can end in disaster
- Partnering with friends or family? Avoid these pitfalls and avoid ruining a relationship
- How a conversation before you start a partnership can save your business years later
- Why you both need to plan for a worse case scenario right from the start
- Tips for ensuring a partnership breakup won’t destroy the business
Action Steps from this episode:
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Who’s going to be responsible for WHAT – how that impacts the partnership. Know Who’s going to be responsible for WHAT. You need to have a clear understanding as to who is going to be responsible for what roles in the business and it all needs to be put in writing. It’s the only way to keep things fair and to hold each other accountable if one of the partners fails to live up to their responsibilities. Put it in writing and plan for every possible scenario
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Complementary People. Find a Complementary business partner – If both of you love bookkeeping but hate talking to customers, guess what, you should probably rethink the partnership. You want to find someone who will compliment you and add value to the business. When it comes to a partnership, 1 and 1 should equal at least 3 to make it worth getting into.
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Make sure you have a shared vision. Be sure you have a shared vision before you start – If you don’t share a similar vision of what you think the business can become, you’ll be faced with conflicting agendas that will most likely end the partnership as you’ll both be trying to take it in different directions.
Links and Resources:
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An article from CNN/Money that talks about the ups and downs of working with your significant other.
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A good article by Ryan Lee on choosing a business partner and why not to choose someone like you.
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Great YouTube video about The Front Row Foundation, the charity we spoke about at the beginning of the episode. If you want to find out more on how to get involved, contact us here.
- We spoke about The E-Myth, by Michael Gerber which is a must read for any entrepreneur.
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Nailed it!
Really great episode guys. Gary, your advice on when to consider a partnership was great. Thinking of it in terms of “Can more be accomplished through this partnership vs me going alone?” is a really great question to ponder.
Advice I’d like to add to anyone in a partnership or currently developing one, if your instincts tell you it’s a bad move, then trust your instincts if there are some things in your partner that just don’t jive well. They may be a great person, but their priorities or goals may not mesh with the priorities or goals the business, or you, need through the partnership.
And I love Mike’s marriage comparison! To push it further, don’t be afraid of counseling. Just like in a marriage, where issues may arise, they can happen to a business partnership. It may be necessary, from time to time, to find an unbiased person to help you work through some issues. Don’t ask your best friend or family members for advice because they’ll naturally side with you and not always be the best and helping you see where you might be wrong.