When you start a business with a partner, you're probably focused on your business plan and business model. There are so many facets to consider, like infrastructure, inventory, cash flow and hiring choices.
That's good—you should do that. But as you do, you may also want to examine how you and your business partner work together. It's just common sense. If you have two captains of a ship (hello, S.S. Partnership), you want to make sure you're sailing in the same direction.
This is by no means a comprehensive list of what you'll need to choose the right business partnership, but there are some strategies you may want to try to help increase your odds of things going well.
1. Make sure you're both equally committed to the business.
You can't really know for sure until you start working together, but your gut can probably tell you if the scales aren't balanced. (Especially if you're spending a ton of time getting your business started while your partner acts like your enterprise is a quaint hobby or side gig.)
Kamil Faizi is the co-owner of Challenge Coins 4 U, a company based out of Cheyenne, Wyoming, that makes and sells military challenge coins. Things didn't go well between Faizi and a previous business partner, he says.
I look for people who are like-minded and share my goals for the company, but do not share my skill set. Having two great marketers starting a company, with no one operating the company is a losing formula.
—Jordan Scheltgen, founder and managing partner, Cave Social
“He would ask about performance and money coming in, yet would never offer to incur the costs of advertising or any risks, such as taking out a business credit card. The burden was all on me," Faizi says.
Since those days, Faizi has taken on another partner, and things have gone much better.
“I talk to my co-owner a lot and we have a good relationship. We each understand what our duties are, and we complement each other well," he says.
Faizi has come to realize that it's important to work with people who are committed to your success, whether it's a business partner, an investor or even someone you work with regularly in your supply chain.
“In the past, I was so desperate for a vendor to fulfill a customer's order that I would just go with anyone," he says.
But Faizi says that he has a great vendor who is accommodating with payment terms and customer service, “and understands that our success is tied to his success."
2. Put things down in writing, like how you'll manage cash flow.
Thomas J. Williams, EA, is a tax accountant and co-founder of the blog, Deducting the Right Way, an online resource for small business do-it-yourselfers. He agrees that ideally, two business partners within a company, should put in the same amount of working capital and time into the business, Williams says.
“If not, one partner is likely to feel overworked, underappreciated and combative, which leads to a working relationship that falls apart," Williams says.
That said, there are plenty of partnerships where one person is a silent partner, funding the business and getting it through the ups and downs of cash flow as the other puts in all or most of the time. It can work, but that's why it important to put everything down in writing—who is doing what, but also things like compensation.
“I've seen clients spend thousands of dollars fighting an ex-partner only to lose the battle because they didn't protect themselves with a partnership agreement," Williams says. “You must prepare for scenarios that might seem impossible but should be in your contract—unexpected disability or death, cash-strapped partner or an uncooperative partner."
3. Look for a partner who has different skills than you.
“I currently run three businesses, all with separate partners," says Jordan Scheltgen, founder and managing partner at Cave Social, a Los Angeles marketing agency. "I look for people who are like-minded and share my goals for the company, but do not share my skill set. Having two great marketers starting a company, with no one operating the company is a losing formula."
Not everything needs to be different—you still need to have the same goals, says Jennifer Davis, an executive leadership coach and founder of Jennifer Davis Coaching in Hopewell, New Jersey. Davis has worked with numerous business partners and has had numerous business partners that she has worked with on different projects and parts of her business.
It's fine if you and your partner or partners “have different work styles, strengths, and areas of development, but having the same goals is a must," she says. "Your objectives can change, but it is important to communicate openly about where you are going."
Otherwise, you may find that you have different ideas of what to do if your cash flow dries up. Should you apply for small business loans or business credit cards? Borrow from friends and family? Sell some assets?
If you both have drastically different ideas, you could be in for a world of financial pain and stress.
4. Enjoy spending time with your business partner.
“Going into business is like going into a marriage, so if you don't get along, regardless of your skills, you won't be around for long. That means you have to like each other, and more importantly, have each other's back," Scheltgen says.
“Most of us spend so much time working that it is critical that our partners are people with whom we have fun," she says. "Many people think that work is work and play is play. Why not combine the two?"
The importance of genuinely liking your business partner is why Lisa Song Sutton, a serial entrepreneur in Las Vegas, says she would recommend partnering with a family member or close friend. Sutton has co-founded several companies, including Sin City Cupcakes, and has had partners in all of the ventures.
“Many people will advise against this. However, I'm an example that it can be done, and it can be done well," she says.
“With a family member or close friend, you know them. You know them. You know what they're like when they're mad, when they're stressed, when they've had a bad day, when someone is rude to them. You know how they handle—or don't handle!—stress," Sutton continues. “You need to know all those things about your business partner, and I think it's a strength to know that upfront, instead of finding out during the course of business."
Of course, that's also a good reason to focus on your business plan and business model with your partner. If you're both discussing topics like infrastructure and inventory, any serious disagreements will hopefully surface then, so you can pull out before either of you have invested too much time and money into your business.
After all, you can have two captains in a partnership. But while some captains' squabbles lead to a sinking ship, that doesn't have to be you and your business partner. If you two do things right, you two could end up happily sailing off into the sunset. You may even do better than that. You may just soar.
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