Partnerships are hard. I’ve heard it said, “the only ship that doesn’t sail is a partnership.”
Partnerships sound great in theory, almost a no-brainer structure for a small business. You get two (or more) minds, two skill sets, and twice the available time that in many cases can lead to an exponential outcome.
You also typically get two visions, two opinions, and divergent expectations.
Many partnerships function just enough but don’t thrive.
In the hundreds of partnerships that we’ve been exposed to we’ve only seen two that can seriously claim that the business is in far better shape due to the partnership than without.
I met with a startup excavating contractor who laid out his plan for his young business, including the threshold levels that would be achieved in order for a second person to be given 49% of his youthful company.
My first question to this eager and excited business owner was, “is this formally agreed upon and in writing?”
“Yes.”
He assured me that the friend-soon-to-be-owner would be bringing skill sets that the founder does not have. While I’m sure that is true, often it will also force the owner to miss out on lessons that will be crucial for him to learn up front that will be buffered and absorbed by someone else.
Nonetheless, the deal is inked, so the next question becomes, “how do I work with a partner in a synergistic, agreeable, valuable, and productive way?”
There are three non-negotiables of working in a co-owner environment that must be committed proactively.
First, you must co-write a multi-page vision story that defines the future snapshot of the business. Where there is a vacuum of vision a business and its people become chaff subject to the various swirls of the wind and will (not might… but will) be blown in a variety of non-congruent directions.
You will scatter.
Once written the partners will be well served to review the written vision no less than every-other-month and make appropriate adjustments based on new information.
The partnership is akin to a boat floating out on an ocean in need of an immovable lighthouse reminding each of the unified direction of the business as life evolves and emotions manipulate.
This regular review of the vision offers each owner a reminder of the agreed upon direction along with an opportunity to clarify.
Second, the partnership must prioritize a dedicated, face to face check in no less than once monthly. This check-in should incorporate pre-determined questions that will uncover desires, blind spots, encouragement, frustrations, and a platform to have the conversation that each may wish to avoid.
This meeting will be easy to bypass due to “busy-ness” or an apathetic “we’re ok”. This meeting should be non-negotiable no matter how good or bad the relationship is going; preset on each calendar and no excuses to allow retreat.
The third element to help maintain the communication channel of a partnership; each partner needs a written non-owner role that supports the organizational day to day of the business.
Most partnerships play the excuse card of “we’re too busy to have roles, we just need to do what needs to get done.”
This is an endless cycle of chaos and inefficient busy-work which leads to bitterness because inevitably one partner will perceive themselves to be working far harder in the business than the other.
Each partner needs a written job role and that role carries a salary. All partners should be compensated in two channels; salary and owner draws.
The partner salary may include incentive compensation based on the role, and is the salary that the partner budgets her life around. The owner draws should be scheduled throughout the year with a pre-determined draw schedule or agreement.
For instance, Mike Michalowicz, the author of Profit First recommends setting up a bank account entitled “Profit”, a set percentage of receivables gets swept into the profit account twice monthly and then the first of each quarter (April 1, July 1, etc.) the owner's draw 50% of whatever is in the profit account.
You can coordinate whatever draw schedule you would like but it should be predetermined, written, and followed with no exceptions. Money disagreements will implode a good partnership with swift expediency; most never see it coming till it is indeed too late.
When a partnership has a collective vision, a means of regular communication, and clarity of day to day role, then the partnership has the necessary channels for partner communication setting the stage for a thoughtful flow of your ideas, thoughts, concerns, desires, and dreams to be heard, vetted, and decided-upon.
Partnerships of any kind are hard because they involve the moveable and oft unpredictable variable of emotion and subjectivity. Not all is black and white, but there are foundations of understanding that can be poured well in advance of an emotional hurricane.
When you enter a partnership you willfully give up certain levels of predictability and controls. You can fight to maintain 100% autonomy, which will end in 100% meltdown, or you can set a course of pre-planning, clarity, and frequency of communication.
In a partnership, that is a voice you do have.
