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In 2019 I bought out a partner and learned business principles that would be hard to replicate in an MBA program or boardroom. My experience, in particular, started out great — with two people deciding to leverage our talents, combined skills and knowledge to better serve the needs of the digital marketplace.
But what happens when you feel like you’re carrying more than your share of the work? Or maybe your partner has lost interest in the product or service you’re offering.
Here are three critical lessons I learned the “hard knocks” way, and that you should consider prior to entering into a business partnership:
Know Your Partner’s Core Values
Blinded by a dream to make a difference in the digital market, it was naive of me to not fully get to know my business partner. You can define your values on paper all day long, but what truly matters is what actions you take to act on them. Once taking the leap full-time in the business, it was clear that our ways of doing business with clients, team members and managing money were not aligned.
Get to know and spend time with your partner for at least a year before taking the plunge forward. If I could go back in time, I would have been more proactive in assessing my partner’s core values through a DISC or Myers-Briggs personality test. These tests can aid in identifying the core values as well as strengths and weaknesses all partners are bringing into the business.
Additionally, I would recommend a vision board exercise to complement the personality test. This can help you to identify what’s important to your potential partner. Are the images being visualized by your partner in line with your goals? As cheesy as it might sound, this may help provoke conversations that you want to have early on in the partnership.
Work As Strategic Partners First
Before pulling the trigger on a business partnership, create a trial run on a few projects to determine if your leadership styles are even congruent for the long haul. This may sound unappealing if you’re generating little revenue, but it can save you from a lot of financial and emotional pain long-term.
This will also aid in clarifying each other’s roles, boundaries and compensation on a small scale prior to jumping into a long-term operating agreement.
Communicate Fiscal Responsibility
Partners must be able to demonstrate fiscal responsibility and a willingness to discuss problems openly and regularly. Through my experience, I learned partnerships can go south fast if both parties aren’t willing to discuss concerns. Our company was bootstrapped from the start, and I learned quickly that money can be one of the major problems in a business partnership.
Agree in the beginning on how you will utilize future profits and distributions for the business.
Set Clear Partner Deliverables
A strong work ethic is a critical ingredient — especially in early startups — and usually needed from both partners in order to experience success at scale. Although setting minimum working hours, revenue deliverables and targets may feel like an uncomfortable conversation, it will allow partners to contribute to the alliance in a fair and equal manner.
Failure to discuss expectations and production benchmarks can lead to trouble, resulting in one partner feeling like they’re bringing more to the table than the other. It’s critical to honestly communicate agreed-upon deliverables and an execution plan on a weekly basis in order to move the business forward.
In business partnerships, there are no guarantees, so select your partners wisely. It is much easier both financially and emotionally to avoid mistakes than it is to get out of them.
