Business partnerships are like marriages.
Except that they fail at a significantly higher rate – 50% of marriages end in divorce while 70% of business partnerships ultimately fail.
It’s enough to make you wonder if it’s even worth getting involved in a business partnership.
Still, there’s no denying the power of partnerships for building massive and memorable brands…
- Microsoft – Paul Allen & Bill Gates
- Apple – Steve Jobs & Steve Wozniak
- P&G – William Proctor & James Gamble
- HP – Bill Hewlett & Dave Packard
- Facebook – Mark Zuckerberg & the Winklevoss Brothers
That’s because – done right – business partnerships have some big benefits: accountability, comradery, twice the bandwidth, and twice the number of skills (assuming two partners).
So how do you “do it right”?
Here are 3 tips from “partner-preneurs” who’ve kept the clock ticking.
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1. Create crystal clear terms
All good partnerships start with a contract.
(Whether it be marriage or business)
Ryan Dossey, the founder of Ballpoint Marketing and Call Porter, has been in business with his brother for several years now. He said “The key” to keeping their business partnerships healthy is being “extremely clear at the outset about roles, responsibilities, and terms.” He continues, “If you and your business partner don’t have a clear agreement, then you’re not setting yourselves up for success.”
That contract should include things like…
- Responsibilities For Each Partner.
- Profit Split
- Cost Split
- Ownership Split
- Decision-Making Standards
- Method For Resolving Disputes
- Management Duties For Each Partner
… and anything else that you or your partner wants to include as a safety net.
Now there’s probably no need to hire a lawyer at this point (or maybe there is!)… Instead, your contract can be relatively informal (an email, for instance) but it should be documented and agreed upon by both parties.
2. Fill each other’s gaps
I’ll never forget when I entered into a business partnership with a good friend of mine.
It was terrible.
As friends, we got along just fine. We would banter about business ideas, discuss our own pursuits, encourage each other, and share interesting things we’d learned.
I imagine listening to us would have been overwhelming for a bystander – lots of excited chatter with very little pause.
But as business partners, nothing clicked. It turned out that we were too alike for our own good. Our strengths and our weaknesses were aligned, which meant that we both had a lot of ideas, too little execution, and too much insecurity.
The goal of a business partnership – the reason for building a partnership at all – is to create something that’s better than the sum of its parts.
As Steve Jobs said, “My model for business is The Beatles. They were four guys who kept each other’s kind of negative tendencies in check. They balanced each other and the total was greater than the sum of the parts. That’s how I see business: Great things in business are never done by one person, they’re done by a team of people.”
Your friends won’t necessarily make good business partners. And your business partners won’t necessarily make good friends.
They are two different types of relationships.
Look for someone with a different skillset and temperament than your own, learn how to work with each other, honor each other’s differences, and understand that the two of you are more impactful together than as individuals.
3. Work together first
You wouldn’t marry someone you just met… First, you date them, then you are engaged for a little while, and then you put a ring on their finger.
Follow the same pattern with business partnerships.
Work with the person for a while on smaller projects, get to know them, their skill sets, their strengths and weaknesses, their communication style, and their work ethic.
Are they the sort of person you would work well with?
I’m the co-founder of The Tonic. But before my business partner and I “got married”, we worked together for nearly 2 years on other projects. Over that time, we built trust, learned how to communicate effectively, and got a good idea for one another’s work ethic. Eventually, the stars aligned and we both felt comfortable entering into an official business partnership.
But it wasn’t until after we’d spent a good chunk of time working together.
Think of your partnership like a marriage – date them first, and if you still like each other, then you can talk about signing a contract.
Even though 70% of business partnerships fail, 30% don’t.
And the 3 secrets above come from the 30% – create crystal clear terms, fill each other’s gaps, and work together first. That’s how you build healthy and productive business partnerships.
At least, it’s a damn good start.
Guest author: Mike is a writer for SUCCESS, AdWeek, and Addicted2Success. He’s been quoted on Forbes and Entrepreneur for his expertise in marketing and personal development. He’s also the owner of Get Your Gusto Back where he helps people reignite their inner fire.