You want to start a business. That’s nice. You have the idea, the target market, the suppliers, the logistics, the pricing. Cool. It’s time to press play. It’s just you. Or it’s you and a mate. Or it’s you and two colleagues who decided to exit the mind-numbing shit show of everyday corporate life but hey, you got on kinda well outside of passive aggressive emails.
I’ve been in this position. It’s romantic. It’s exciting. It’s those first few weeks of dating when the passion is palpable and their stray nose hairs are endearing.
But did you ever stop to think about rather seeing the worst in people from the start so you can deal with it early? It’s not as morbid as it sounds, but it’s crucial to pinpoint where you and your business partners soar and where you flop. Then you can find where you can plug the holes in each other’s skills.
Kinda reminds me of going into marriage with divorce in mind.
There are a number of benefits that can result from planning a business with another person, but there are potential drawbacks as well. If you are not on one accord with your partner(s), it can be more of a hindrance than a help to pursue entrepreneurship. Before agreeing to commence with a start-up idea, be honest about who you are, and get the same from your potential partners.
In this short time, I’ve been through the wringer with partners. Four out of the five have been mostly positive.
I would like to share a few personal anecdotes on my experiences with partnerships (and 100% ownership) and I hope it can help you going forward.
I own 100% of STIR. I’ve never had business partners so it’s always been all mine.
To put it simply, don’t do this.
Yes, STIR has been going for eight years and it is successful (and I am endlessly grateful for that), but my fuck, going it alone is tough. And lonely. No matter how much support you have from staff, friends, family, clients and suppliers, it all comes down to you and you will never feel more alone.
There are, of course, up sides in that you have complete freedom to make decisions when you want to make them and you’re not, in theory, bound to answer to anyone. In my experience, this still doesn’t make it worth it.
The Blow Up
I had a partnership dissolved by selling my shares back to partners after everything went to shit. In short, this happened because expectations were mismatched.
My partner was someone who was initially a client of STIR’s, and adored our work with e-commerce. Having all the logistics and product in place, I was approached to partner to launch our own store. With all the nuts and bolts already tightly secured, it should have been an immediate success. What this person didn’t realise was the state of the e-commerce market as a whole in SA and the psychology of customers. It made this person impatient despite numerous attempts to explain that nothing is an overnight success. This person became aggressive toward me and made baseless accusations around fictitious targets which were never agreed upon.
I’m not blameless. I should have been clearer in what it involved to make businesses like this successful to people who had never done e-commerce before and had everything handed to them on a silver platter their whole lives.
The lesson here is to slow things down initially. Bring your insights, stats and case studies to your partners to let them know that success won’t happen overnight. Be very clear about the costs involved and how much you’re willing to invest (I mean, rather take other peoples’ money but that’s a blog for another day)
Also, if you’re partnering with someone who’s an entrepreneur for the first time, cool their heels. Without sounding negative, let them in on the realities of owning a business, not the glam that has been sold to them by the success stories.
The Perfect Partnership
In another business, my partner couldn’t have been more different to me. Mentally, spiritually, physically. But our work ethic was perfectly aligned.
He focused on operations, logistics, production, and staff. I focused on business strategy, marketing, sales, IT, and CRM.
I say this was the perfect partnership, because our skills were completely different. Not only that, but we gave each other the space to apply our skills to the business. This is an important lesson. As an entrepreneur, you will wear every hat and it will feel like you need to master every function within the business. But if your partner knows a function better, leave them to handle it and don’t try and encroach on their expertise. Yes, express your opinions or concerns and ask for help in understanding their reasoning, but you’ve basically married this person, right? You should’ve known that trust is imperative from the start.
Sadly, this business failed for reasons outside of who I partnered with, but given half the chance, I would work with him again in a heartbeat.
The Evolving Partnership
Having talked about how crucial it is to identify your partner’s strengths and weaknesses upfront, the truth is there’s only so much preparation that can be done. It’s likely that your and your partner’s true colours will only show once you’re in the thick of it.
Don’t become an entrepreneur if your communication skills are shit.
I’m currently working through this with SwiftX. There haven’t been any butted heads with my partners thus far, but we are ironing out a few things in terms of skills, roles and responsibilities to avoid any potential clashes.
My partners are experienced in start-ups, they’re realistic, and they have thick skins, so having “difficult” conversations with them is easy.
As with just about everything in life, there’s no copy and paste solution and you have to do what works for you. But I have summarised a few pros and cons for you below:
Pros of starting up a business with a partner:
(1) An extra pair of hands to get things done
An extra set of hands can be very beneficial due to the fact that much of the time used to run a business can be taken up by tedious tasks. These tasks can include anything from managing the SEO, working late into the night, and handling seemingly never ending problems.
With a partner, you have the potential to tackle more issues at a time by dividing tasks up evenly between the entire team.
(2) You can benefit from additional knowledge of other partners
While it’s nice to trust in our own knowledge, in all reality; there is no way for one person to be knowledgeable of every aspect of the business realm. Therefore, by bringing someone onto the team that has the knowledge that you lack could provide potential benefits to you.
They may have prior experience that could prove beneficial to you.
(3) Sharing the financial burden
Starting a business can be a costly feat. By doing it with a partner, you share the financial burden of overhead expenses for equipment, retail space, and inventory. This can allow a bullet to be dodged as far as initial debt is concerned.
(Again, please try and use other peoples’ money, though.)
(4) Nobody is separate from the business.
A partnership is not a different legal entity from you or others involved. Therefore, as it pertains to debt collection, and other legal actions; all partners are legally responsible. Therefore, if debt collectors are not paid, everyone’s personal money can be at stake.
When the business goes through peaks and troughs, you and your partners ride that same wave. It’s comforting to know someone is enduring what you are.
Cons of going into a partnership:
(1) You cannot make a decision on your own
If you or your partner acts alone, the results can be disastrous, and all shared owners will have to take the financial hit if one is to come. Therefore, it is imperative that all decisions be at least ran by the business partner to avoid making reckless decisions. In the event things don’t go according to plan, a sole person cannot be held responsible.
In the event that you and your partner cannot resolve conflict and you get sick of working with them, you can dissolve the partnership with an effective exit strategy. You will need to redistribute losses, gains, and responsibilities among any remaining partners from the start. The entire structure of the business may need to be altered as well.
(3) Splitting profits
Although there are nice perks to running a business with another person, every entrepreneur takes a hit to the total revenue you will claim for yourself. Depending on how many partners are involved and their service, your profits could range from minute to fairly large.
(4) Placing too much value on shareholding
Business advice should be sought before any paperwork is signed and agreed upon. Never go into a partnership blind, always seek business lessons before agreeing to anything from a legal standpoint. You will save yourself a lot of headaches from a legal point of view, but be sure to secure that shareholder’s agreement as early as possible.
I hope this has been helpful, and please feel free to share some of your partnership stories with me.
If you’d like to discuss anything else or book me for a talk, please email firstname.lastname@example.org.