Jenny and Erin

When Erin and I started working together several years ago we received nothing but warnings about forming a formal business partnership. We were told horror stories about fights, dividing a business and clients up, unpaid bills and even pillaging of accounts. Thankfully this has not been our experience. While luck most certainly has played a part, so have a few other things.

Here are our top ten tips for creating and sustaining a successful business partnership:

1. Choose your business partner wisely. You will be spending a lot of time with one another, so you better like, and more importantly respect, them. Over time your partner’s good and not so good traits will rub off on you, whether you like it or not, so find someone worth emulating.

2. Start by creating an exit strategy. Yes, this is rather like a pre-nup and is just as uncomfortable discussing; however, it is essential to hammer out these details when optimism still rules. Decide how the business will be dismantled; what will happen to the assets, the projects, and the product. Write the plan down and notarize it.

3. Clearly identify roles and responsibilities. If you are anything like us you decided to enter a partnership for a reason, most likely the other person has something you don’t. Leverage these differences. Build your roles and respective responsibilities around each partner’s strengths, not egos.

4. Set aside at least ten percent of everything you make. Unforeseen opportunities and expenses will occur. Let your safety net make you money through investments, and when you deserve it the interest can pay for a nice dinner!

5. Talk about the boring stuff. This is too important to leave off the list. Writing a business plan - boring. Yearly, quarterly and project planning - boring. Meeting after a project’s completion to discuss how to improve efficiency – really, really boring. While not exciting or fun, all of these things are critical to success. Remember this time is only wasted if you don’t take good notes and have to repeat the conversations.

6. The spirit in which you treat one another matters. Approach your business partner with a positive spirit. This can be hard. It is easy to fall into the blame game when things go wrong, and trust me they will. Even when things are their fault set about fixing it in a gracious manner. If you don’t, they’ll remember when you mess up, and given enough time you will. Karma is funny that way.

7. If the other person is scared never show your fear. Someone has to remain calm. If things start going really, really bad (and if you are having any kind of success at all this is going to happen, success breeds its own problems) and your business partner is ready to throw in the towel don’t ever, ever show that you are feeling the same way. Even if you have to fake it. Step up with a pep talk, a kick in the pants, well whatever it takes to make it through.

8. Figure out what the other person wants to get out of the partnership and do your best to make sure that happens. I’m surprised at how many people overlook this essential. It is important to know what motivates your partner, don’t assume it’s what motivates you. Really listen and write down what you hear. If one of their primary motivations is a flexible schedule do what you can to ensure that is their reality. Check with each other periodically to see if motivations have shifted or just deepened.

9. Don’t be afraid of uncomfortable conversations. Schedule time to talk about money, talk about what is and isn’t working, and talk about when you or your partner dropped the ball. The more you talk about uncomfortable things the easier it gets. Little things can cause big problems. It is easier to trust one another when you are each being held accountable.

10. Be willing to let the other win. Only fight to win if the outcome really matters to you, otherwise defer to the person with the most reasonable argument and if that doesn’t work, flip a coin! Seriously…

This entry was posted in Miscellaneous on Monday, May 28th, 2007 by Jenny. You can follow responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.