They start out well, all parties fired up and ready to go, everybody working hard to ensure their goals and interests are fulfilled. Sometimes these interests and goals align with the businesses, but in many cases they don’t or eventually move away from the needs of the business. Partnerships can form for a number of reasons and sources, spouses, friends, or business associates. In some cases the business may be small and relatively easy to manage, all is well, however as it scales one or more of the partners take on more and more of the work leaving a disparity and resentment due to the amount of work each partner is doing.
I have been in four partnerships during the course of my career each with their own dynamics. I am currently involved in two, one that produces an event the Red Lodge Songwriter Festival and the other that facilitates a high end business mastermind group, The Yellowstone Business Forum. Each one has it’s challenges and it’s successes. In this article I will share some of the pitfalls and challenges with partnerships and some preventive measures to make your partnership the organizational foundation for success.
Do you have the right partner. Having the wrong partner can be the source of a great deal of personal stress, it can also have a negative effect on your business and your staff.
If you can answer yes to any of the following questions you are probably in a bad partnership.
- Your’e feeling like you’re carrying more than your share of the work. If you’re feeling this way I would suggest writing down all the necessary job functions of your business and #1 who is responsible for each and #2 who is doing them. By completing this exercise you can substantiate your feelings, not only to yourself, but your partner.
- Your partner seems to have lost interest in your business.
- You’re finding more and more to disagree about.
- There have been changes in your partner’s life that are interfering with their ability to fulfill their duties. There may be times during the partnership that the other partner is willing to pick up the slack for their partner who may be dealing with temporary illness, family or personal issues. However a partner may have found more permanent interests such as another career, hobbies, or financial interests that are interfering with their ability to function effectively in the business. This may also lead to a conflict of interest if the other interests are closely aligned to your existing business.
- Your interest in the direction of the business has taken a different direction than your partner. This often happens when the size of the business scales up. While all the partners originally shared the vision of a growing business there comes a point when the size of the job and the amount of work that needs to be done scales up relative to the growth of the business. Some partners are not willing to put in the additional work or effort to substantiate that growth. In these cases one or more of the partners will end up doing a disproportionate amount of the work to keep up with the growth causing serious resentment within the partnership.
- Can’t talk to each other. Communication is so critical to maintaining a viable partnership. When partners get so busy doing their own thing that they can’t find time to sit down with the other partner(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to communicate freely.
- Employees come to you for direction, even if they report to your partner on your org chart. Employees are always a great barometer of success and failure within your business. If your employees are coming to you for direction or with their concerns rather than your partner, this is a pretty significant sign they recognize who is in charge and who’s is leading the company.
If you answered yes to any of these questions you are in a bad partnership and should immediately take steps to take charge and fix the partnership or end it.
Here are a few steps to give your partnership the best chance to succeed.
What business are you in. Seems like a pretty simple question but if you cannot agree on what business you’re in you’re probably never going to be on the same page. In one of my partnerships my partner and I co-produce a Songwriter Festival in Red Lodge. It takes place over three days drawing tourists and music lovers into our community. My partner is a musician and naturally sees the festival as a music business. However, it takes all the elements of a good event, venues, fundraising, personnel management, talent, marketing, ticket sales etc. to make it work. I naturally see it as an event business whose product happens to be showcasing songwriters. This disconnect is a fundamental problem. My other partnership is the organization and facilitation of a high end business group. We both share the vision of helping business people be more successful and better leaders. We also understand each other’s strengths and limitations. We often use our partnership as a sounding board to further our other careers as a non-profit executive and business consultant.
What is each person’s expectations and needs. This can easily become a conversation of self interests and that’s OK. It’s important to get this information out on the table early. If not it will surface somewhere down the road and may make the partnership uncomfortable or worse create a conflict of interest for the business.
What are the company’s goals? Define your company’s goals and create a business plan with the steps necessary to accomplish those goals. Accountability is key for the success of any business. Defining each partner’s responsibilities and commitment to accomplishing those goals is key to your businesses and partnerships success. When personal goals become more important than the companies goals the business and partnership will suffer.
What is each partner’s role. This is probably the most important aspect of a successful partnership..Understanding and defining each partner’s role and responsibilities is key for the business to run efficiently and the partners getting along. A lack of clarity around job descriptions and roles is a source of major frustration and disappointment in most partnerships and can often lead to their demise. These responsibilities should be written down and become part of the businesses strategic business plan. They should also be reviewed at least once a year and updated if necessary. These roles should be based on each person’s skill set and needs, many subsequent decisions can be made such as percent of equity, position within the company, decision making abilities and titles once the roles are set. There is no written role that partnerships are 50/50 propositions and that partners need to equally share in decision making responsibilities. In most cases someone has to drive the bus, be overall responsible for getting things done and be accountable to customers, employees and other stakeholders.
In one of my partnerships my partner is very out going, an A type personality. He also has close ties to music talent in Nashville. On the flip side he weak on commitment and follow thru. His role is talent acquisition, sound and PR. He does a great job of being the frontman for our festival making sure everybody is having a great time, and the artist needs are being met both onstage and off; an important role. The day to day running of the business has to be picked up by the other partner, in this case me. Marketing, bookkeeping, fundraising, logistics, etc. We both have opinions but once the overall business plan is set the final decision when it comes to our areas of responsibility lies with the individual.
Handle disagreements, frustrations and disappointments early. As in any type of partnership disagreements will happen. It is best to address them early and not let them fester over time. It is also important to address them in person. All too often in our electronic age of instantaneous response an email or text is sent that can be full of emotion or words that can easily be taken out of context. Regularly scheduled sit down meetings or lunches is a good time to discuss issues that the partners may see differently and attempt to get back on the same page. If you have clearly defined goals and action plans this is always a good place to go back to if there are disagreements. Many a disagreement can be resolved by going back and seeing how each person’s belief will impact the goals of the business. If there is a need for a change to those goals now is a good time to discuss it.
Can the partnership be fixed? Breakups are hard and can be time consuming taking the focus away from the business and if attorneys are involved valuable monetary resources. In many cases the partnership can be fixed but it will be up to you to take action. Here are a few steps to take to right the ship
- Be proactive
- Be clear in what you want
- Schedule time to talk
- Discuss actions you are each willing to take, compromise might be necessary.
- Write a plan for agreed upon changes
What happens if the partnership no longer works? It is important to have an exit plan upfront so that each partner knows when and how they can exit the partnership and what they will leave with. It should also addressed how a partner can be fired and how that might affect their equity. There’s no written rule that partnerships last forever and in fact most do not. For a number of reasons, some listed here, others not, partnerships will end and you should have a written plan in place on how to unwind the partnership so it has minimal effect on the business. Things like client relationships, non-competes, proprietary information, client lists, patents, financial information should be addressed and how any equity is paid out or in some cases if the business is in debt what the exiting partner is responsible for should be spelled out.
There are times when using a mediator or a third party to facilitate that conversation is useful. Beartooth Business Consulting can be that resource. Please call us for a free consultation to see if we are the right tool for your situation. 406-690-5988 or email us at email@example.com