By Paul Taylor
For those of you considering nuptial vows, I’m sorry to say this article is not intended to assist you with navigating the waters of holy matrimony. However, the commitment of entering into a business partnership is pretty darn similar to the agreement made at the altar. Although I wouldn’t class my marriage-counseling skills in the same league as Dr. Phil, I have acquired some tried-and-true rules of thumb for evaluating, forming, and maintaining successful business partnerships.
Statistics show that more than 50 percent of business partnerships end in failure. But, at the same time, partnerships are four times more likely to succeed than sole proprietorships. The basic gist of a business partnership is that two or more individuals decide to join forces and share in the profit and loss of a single business entity. Regardless of the number of people involved, or the breakdown of equity, the bottom line is that stakeholders will need to work together to achieve common goals and objectives. The manner in which partners formulate and attack their goals will likely be the key factor influencing the success of the partnership and the business as a whole.
There are several things to consider when choosing a partner, structuring the deal, and then determining how to keep the feed wheels turning smoothly once you and your new partner(s) have signed on the dotted line. They are as follows:
A perfect match?
Choosing a compatible partner from the get-go may be the single most important decision influencing the eventual outcome of the business union. There is nothing wrong with partnering with a buddy, but I would strongly advise looking deeper than whether or not you enjoy shooting pool at the local watering hole with this guy. If your business is going to succeed, you and your partner will have to work together very closely — through thick and thin. In addition to respecting your partner on a personal level, you should absolutely look for someone who complements your capabilities and strengths. It is also important that you pair up with someone who shares your basic sense of business ethics.
Grand scheme of things
Creating a shared vision and road map for success is just as important as picking the right partner. If you have aspirations to build the next Davey Tree or Asplundh, but your partner is more interested in creating and maintaining a smaller boutique operation, this will likely lead to friction down the road. Making sure your overall vision and goals are more or less in line will assist in keeping all the knives chipping in unison.
Division of labor
Clearly defining each partner’s role in advance will help ensure that expectations are met. Strong partnerships are built upon a shared sense of expectation fulfillment. If you decide to partner with someone because you thought he was good at selling jobs, but it turns out he’s a slacker when it comes to effectively completing estimates on time, you’re going to feel let down. Avoid negative feelings by delineating primary responsibilities, and be sure to incorporate the division of labor in your written partnership agreement.
For better or worse
Looking out for your partner’s best interests may be one of the best ways to take care of the business as a whole. Your venture will have a much greater chance for survival and success if both partners feel they are winning as individuals, and that personal performance is adding value to the business. If you get into a situation in which personal achievement takes on an air of rivalry, or one-upmanship, you can bet this will hinder forward progress. Work together with your partner so all activities and accomplishments are aligned with the greater good of the business.
Open lines of communication
Just as sure as you are bound to get pricked a time or two when chipping thorn apple, occasional friction between you and your partner is bound to occur. How you deal with these rubs will play a major role in the long-term success of your partnership and the business. Make sure your partnership bearings are greased on a regular basis, and avoid the tendency to sweep problems under the rug.
Get it in writing
Regardless of business size or number of stakeholders, I can’t stress it enough that all the important understandings between you and your partner(s) should be put in writing. Your partnership agreement doesn’t have to be eloquently written, but it should address all the nuts and bolts of your arrangement. During challenging times, this document will serve as a road map for both the direction of the business and stakeholder roles.
Navigating the rocky waters of entrepreneurship is a challenging affair, regardless of the chosen business structure. How you go about evaluating a potential partner, structuring the business, and dealing with one another once the union is formed are all factors in the ultimate success of your endeavor. Investments made up front in structuring and maintaining your day-to-day working relationship will pay you back in spades — both monetarily and emotionally.
Paul Taylor, founder and former “head monkey” of Arborwear, has been involved in the tree care industry since he bought his first chain saw (before he was old enough to drive a car). He is now involved in a new venture, Long Splice Design, and specializes in the design, manufacture, and sourcing of sewn products. You will also find him a couple days a week plying his favorite trade in the treetops. He can be reached via e-mail at firstname.lastname@example.org.