Aug 11
30
Partners
One of the most divisive topics I’ve read about in countless books and blogs is the advantages and disadvantages of going into business with a partner. And if you do, how do you divide up the company in a way that will keep everyone happy? And how do you make sure everyone lives up to their end of the deal?
Let me first start out by saying that I think it very wise to have a partner or partners. People that have found good partners are far more likely to succeed in their business goals. I think a lot of the opposition to partnerships doesn’t come from the institution of partnerships in and of its self (if you can call it that) but from a lack of good partners.
There’s lots of things to keep in mind when selecting partners.
Partner equity
Mark Suster does a pretty solid job on this one so I’ll just send you over to his blog to read his take on Founders, Owners and Prenuptials.
Doing this part right will save you from many uncomfortable meetings and conversations. You don’t “give” equity, equity is earned.
Getting to know your partner
There are lots of parallels that can be drawn between business partnerships and marriage. In both you should spend a good deal of time getting to know your future partner to see if this person is someone who you want to be legally joined with. One big difference is that it’s acceptable to do a background check on future partners while it might come off as a little creepy to do one on that really attractive girl at the coffee shop after your first date. You need to understand the future partners history, philosophies, goals, past times, habits, strengths, weaknesses. A good partner can build you up and make you more successful. A bad partner can drag you down and make the partnership/marriage a living hell, not to mention the ways that you’ll pay for your mistakes long after that partnership/marriage has been dissolved. A future partner that tells horror stories about their past partners will probably tell similar stories about you.
In my life I’ve seen the direct effects of choosing bad business partners. Much of my life growing up was shaped by a couple business partners that really had nothing to do with me. These were my dad’s business partners. But because of the choices of those partners I didn’t have many of the opportunities that my classmates did. This isn’t a blame game, I just want to highlight the power that a partner has to be an influence for good or evil over the lives of those involved with him/her, directly or indirectly. A partner who understands this power and respects it will be a good partner 9 times out of 10. A partner who doesn’t understand this concept is almost as dangerous as the ones that do but have no ethics. It’s very clear why those partners should be avoided.
Unfortunately most entrepreneurs make the common mistake of bringing in partners who don’t get it. This usually happens from not getting to know your partners beforehand or not understanding what to look for in the first place. They don’t understand what’s involved in being a good partner and don’t understand when they are doing something wrong. They make this decision out of emotions (which shouldn’t be ignored) rather than weighing the pluses and minuses of the partner.
One big difference between dating and shopping for business partners is that it’s a good idea to completely take emotions out of the picture (if that’s possible) when you choose a partner. As long as your partner fits well with the company culture you hope to build it doesn’t really matter how well you get along. If your partner isn’t your best friend that makes so many things less complicated.
Related articles
- 50/50 Cofounders (avc.com)
- Love & Money: Partnership/Co-Founder Deathtrap (businessinsider.com)
- Avoid Business-Partner Purgatory with These Helpful Planning Tips (brighthub.com)
