A couple of months ago my husband was in discussion with some business associates who wanted to form a joint venture construction company. Since just about everyone I have ever met in business has told me to run screaming from partnerships, I was quite leery of the whole idea.
So in addition to asking a lot of questions, I sent a Twitter message to my buddies and asked what advice they had regarding partnerships. The overwhelming response was:
Do your research and "date before marriage!"
One of the strongest voices was my buddy Jonathan Fields, who offered some really concrete advice.
The topic must have been rolling around in his head since today he wrote a great post titled "11 Ways to Avoid Entrepreneurial Divorce Court." His recommendations include:
- Talk about relative strengths, experiences, skills and weaknesses.
Take the time to get a really solid feel for who’s bring what, in terms
of operating capability, to the table. Move beyond words and explore
- Define broader lifestyle visions and core values – You
may be on the same page when it comes to the business, but to the
extent possible, you also want to either be on the same page or be able
to foster genuine respect for each person’s outlook on the role of the
venture in their bigger lives and the value they expect to run both the
business and their lives by.
- Share venture specific vision, long-term goals/desired exits – Have
each person write a detailed concrete description of the long and
intermediate term visions for the company and, if appropriate, the
desired exit strategies. Do this on paper and DO NOT DISCUSS them until
they’ve been committed to paper. Then print them out and swap papers.
Doing it this way will keep each person’s vision their own, rather than
pressuring one or both people to relent to the perception of the other
person’s public, maybe more strongly argued position. From these
positions, now the real discussion can begin.
- Check out resumes, references, online reputation and interests – As much you value your gut instinct, be smart and do your due diligence. You cannot imagine the surprises you’ll find.
It is a great read and really good advice – read the rest here. I also wrote a post about partnering a couple of years ago that compliments what Jonathan said – The delicate art of business partnering.
I am happy to report that after we did most of what Jonathan recommended, my husband did move ahead with the partnership (called Red Road Construction, which will focus mostly on infrastructure projects on local Native American reservations) and have had great early success. His partners have skill sets and expertise that truly compliment my husband’s, and their work ethic and values are very much in harmony with his. We are very optimistic about our future, and excited to have found a great way to serve an exceptionally tight market.
So if you have some attractive opportunities come your way with new partners, be cautious but open-minded. If I had followed all of my own fears, I probably would have nixed the whole idea of a joint venture and lost out on great learning and financial opportunities.
Hi Pam! Awesome comparison of business partnerships to dating/marriage. It really got me thinking… statistically, something like 50% of marriages today will end in divorce, so maybe it is easy to understand why so many partnerships are disasters? Especially if these partnerships are more like people “rushing into marriage” than people going the traditional courtship route? Hopefully more people start thinking about business relationships in these frameworks. Great work!
I still want to stick it out as sole proprietor (once I even get that far), but great advice like this makes it easier to consider the possibility of carefully partnering up where it makes sense. By the way Red Road Construction is an awesome name.
Yes, I was humbled by the success of the partnership after my initial reservations. When you have just the right mix of people, it can be a very good business situation. And an alternative is always forming a strong working partnership without the legal structure, where possible. This is often the best of both worlds in a service business, like my consulting work I did in the past.
As for the name, I am so glad you like it! The partners and my husband gave me the honors of coming up with the company name. I asked them all about their feelings about work, and what they ultimately wanted to contribute to the communities they worked in. Everyone came back with a strong sense of connection with family, and building infrastructure on the long-neglected reservations. Many elders are forced to bounce along on muddy and potholed roads on their way to Dr. appointments. And communities in general are fragmented by youth addicted to drugs like Meth and alcohol (who are often joined by parents and even grandparents, which is the ultimate horror).
The term “red road” has special significance in Native communities since it means “walking the good path,” living a clean life, in harmony with others and mother earth. This term is something elders can relate to, and speaks to the “end result” that my husband and his partners wanted to accomplish. The fact that the work they do is road grading and paving in Arizona gives a little play on words. They are, indeed, digging in red dirt to build roads.
And on a practical side, my husbands partners do not speak Navajo, so I didn’t want to come up with a term they could not pronounce. There isn’t a name much easier than “red road,” is there? Kind of has a Romper Room roll to the tongue.
You know that I am a branding nerd, so to hear you like the name means a lot! I am really happy with it.
Great advice in this post. I also recently read Paul Hawken’s Growing A Business. In the book he gives really sage advice about the most important characteristic in a partner being unfaltering honesty. From personal experience, I can attest to this. I would take extreme honesty over intelligence any day.
Excellent advice as always Pam! My advice about partnerships is to realize at the outset that they will end. It’s nothing personal–it is just a fact that people and companies enter into partnerships to shore up a weakness or take advantage of an opportunity. They do it for properly selfish reasons. Eventually the partnership outlives its usefulness. So considering a partnership a marriage is the first mistake…it’s a rental. Thinking of it that way and acting accordingly will save a lot of litigation down the road.
I asked an associate to consider coming on as a partner in my start-up. Before solidifying the deal, though, we are both working through a set of questions from the E-Myth by Michael Gerber. There’s a chapter in which he discusses your primary aim, which encompasses not just your business, but your lifestyle as well. I recommend going through those questions with your potential partner first.
My accountant recommends: “With any partnership, whether business or marriage, assume you’ll get divorced and plan accordingly.”
What you’re looking for when forming a partnership is eliminating uncertainty. Lawyer will know pretty much everything that can go wrong and will help you cover the angles.
Example: What happens if your partner dies? Odds are you don’t want to all of a sudden be partners with their spouse, so you need a buy/sell agreement. What happens if the partnership is on good terms, but a party wants out for whatever reason? etc.
Partnerships get complicated. In The Bootstrappers’ Bible Seth Godin recommends avoiding partnerships because one person inevitably ends up pulling more weight. If at all possible, keep full ownership and work with people as needed on a work for hire or even barter basis.