When a partnership works, it’s a beautiful thing. When it doesn’t, it defines ugly.
Once, during a conversation with a mentor about partnerships, he made this declaration: “Partners are only good for two things: sex and dancing.”
My mentor’s personal experience led him to make that indictment. My experience has led me to be more thoughtful, but I still advise anyone planning a business partnership to consider his rude but worldly comment as a handy caution to purge their plans of naivete.
A business partnership should be entered into with a healthy dose of reality about the human element involved. My friend, David Gage brings sunlight to this reality in his book, The Partnership Charter, wherein he writes, “Business people are experts in what they do, but they’re not in how to be partners.” Boy, howdy, is that true!
If you’re considering a partnership structure for your business, Gage recommends asking yourself, and your potential partner, the three questions below, which are followed by my thoughts.
1. Why do I want a partner?
Having a partner means you can share the work and the risk. But it also means you have to share the decisions and the rewards.
For a partnership to work, all parties must place a higher value on the advantages of shared work and risk than on the efficiency of making unilateral decisions and keeping all the loot.
2. Are there better alternatives to taking on a partner?
Just like in a marriage or any other relationship, both parties have to bring something of value to the table. Examples could range from experience to skills, to contacts, to capital.
The advantages of each partner to the endeavor should be identified, quantified, and valued. Then each partner must determine if other alternatives to acquiring these benefits – and there are always alternatives – are more or less valuable than those of a partnership.
3. Is my prospective partner the best candidate?
If, after thoughtful and analytical evaluation, you determine that you prefer the partnership option, remember, that decision isn’t the same as who should be your partner.
When President Lincoln said at Gettysburg that “all men are created equal,” he wasn’t talking about business partners. The person you’re considering may not be suitable for your, or any other partnership.
Now here are three of my quick partnership questions.
4. Work ethic: Are we compatible?
All small businesses have more work to be done than people to do it. Don’t take a partner unless you know he or she understands and accepts this commitment.
5. Vision: Is ours compatible?
Your views on the development, growth, and ultimate dissolution of the business don’t have to be identical, but they must be compatible.
6. Values: Do ours align?
If you had to rank all the considerations for forming a partnership, most of the factors could be moved around, depending on the circumstances. But the issue of shared values is always going to be the numero uno, default, go/no-go factor. No exceptions. Immutable. Non-negotiable.
If your values are misaligned, all the money and success in the world won’t result in a successful partnership. Believe me, I’ve seen more than one misaligned-values train wreck. It’s as ugly as ugly gets.
Value factors to consider include, but are not limited to: devotion to ethical behavior; how to treat employees; is regard for customers transactional or relational; intellectual honesty and sense of fair play.
Last two points: Don’t begin your partnership without a plan – in writing – of how it will be dissolved. If you read my recent column about neurotics and character disorder, never go into a partnership with someone who has the latter. Every problem will always be your fault.
Write this on a rock … Do the same due diligence on acquiring a partner as you would a business.