6 Things to Consider Before Partnering Up
If the technical skills of Steve Wozniak didn’t get matched with the business acumen of Steve Jobs, the world’s best performing company would not be in existence today.
While Jobs and Woz are a great example of what a great business partnership can achieve, they are not the only examples. Think of Larry Page and Sergey Brin of Google. Bill Hewlett and Dave Packard of HP. Pierre Omidyar and Jeffrey Skoll of eBay. Gordon Moore and Bob Noyce of Intel. William Procter and James Gamble of Proctor & Gamble. Bill Gates and Paul Allen of Microsoft.
These people are great examples of how partnerships can result in very strong businesses. Partnerships bring together people with complementing skills and experiences and allow them to make the most of their shared resources to build highly successful companies.
If you are thinking of a great way to expand your business, getting into a business partnership might be a wise decision for you.
At the same time, however, it is good to note that bad partnerships can destroy a great business.
Therefore, you need to make sure that you are getting into a business partnership for the right reasons, and that you have taken some important factors into consideration before getting into the partnership.
GOOD REASONS FOR PARTNERING UP
Just because some of the biggest companies in the world were formed by great partnerships, this does not mean that you should get into a partnership just for the sake of it.
You need to think about the benefits that will arise from the partnership.
Below are some good reasons why you might consider getting into a partnership.
You and Your Partner Have Complementary Skills
Running a successful business requires a wide range of skills and talents.
Unfortunately, it is unlikely that one person will be have all these skills.
While you might good at some aspects of running a business, you probably suck at others.
In such cases, getting into a partnership with someone whose skills complement yours is a great way of compensating for each other’s weaknesses.
Each of you can focus on your strengths knowing that the other person is working on the things you are not good at.
This is the reason why some of the people in the examples given above got into partnerships. While Steve Wozniak was good at building computers, he was a poor business man.
Steve Jobs, on the other hand, had great business foresight, and knew how to turn Woz’s computer making skills into a profitable business.
Similarly, Gordon Moore was avid in technology, while Bob Noyce had a visionary business acumen. By combining their complimentary talents, they were able to build the largest microchip company in the world.
You Want to Expand Your Business
One of the benefits of being in a partnership is that it allows you to take on a lot more projects than you can when running the business on your own.
It allows you to shoulder more workload, which can lead to an explosion in your company’s income.
It is a Great Way to Spur Creativity and Innovation
Regardless of how creative you are, there will be more ideas when there is more than one person contributing to the idea pool. In addition, brainstorming on your own can be quite a difficult task.
However, with a partner, you have someone to bounce off your ideas on and give you a different perspective.
In addition, combining both your ideas can result in new, innovative ideas that would have been impossible for either of you to come up with on their own.
Having a Partner Can Help You Break Out of Your Cocoon
Warner Bros Movie Studios was created in 1918 by the Warner brothers, Sam, Harry, Albert, and Jack. At one point, Sam Warner came up with the idea of synchronizing sound with their movies.
At the time, this was quite a radical idea, and Harry Warner was against the idea. He felt that no one wanted to hear actors talk, since this was how things had always been done.
However, they eventually went along with Sam’s idea, and in 1927, The Jazz Singer was produced by Warner Bros as the first “talking picture.”
Sam was willing to break free of the old way of doing things, and in so doing, he changed the course of not just Warner Bros, but the entire film industry.
If it wasn’t for Sam, the other Warner brothers would never have considered adopting something as radical as movies synchronized with sound.
The point here is that having a partner can bring in a fresh perspective and shake up a business out of its cocoon, allowing it to achieve growth that would have otherwise been impossible.
Partners Can Help You Take on Greater Risks
Having a business partner can also spur you to take on risks that might result in huge growth for your business, risks that you would have not taken otherwise.
When you have a business partner, you know that someone else has got your back in the event that things don’t go as you expected.
This gives you the confidence to step out of your comfort zone and attempt things you wouldn’t have considered if you were alone.
Mountain climbers provide a good example of how having a partner can give you the confidence to take risks.
For instance, when attempting to climb Mt. Everest in 1953, Sir Edmund Hillary and Tenzing Norgay relied on each other for safety when attempting risky maneuvers.
At some point, Edmund broke through soft snow and fell into a crevasse.
Luckily, he was roped onto Tenzing. This broke his fall and saved him from what would have been a fatal accident.
Just like Edmund and Tenzing, having a great partner allows you to attempt big things with the confidence that your partner will be there to pull you out in case things don’t work out.
A Partner Can Also Prevent You from Risking Too Much
In addition to giving you the freedom to take greater risks, partners can also prevent you from risking too much.
For instance, one of the most prolific investors, Mr. Warren Buffet, has partnered with Charles Munger for about five decades because of Munger’s attitude towards investment.
Whereas Warren is very enthusiastic about investments, Munger is a lot more reserved. According to Warren Buffet, Munger’s attitude and approach towards investment has many times kept him from doing something stupid with Berkshire Hathaway money.
Just like Warren Buffet and Munger, a good partner will let you know if your idea is full of crap and prevent you from taking risks that could be crippling to your business.
POOR REASONS TO GET INTO PARTNERSHIPS
Like I mentioned, getting into a partnership for the wrong reasons will more often than not lead to failure.
Some of the reasons why you should not get into partnerships include:
- You are afraid of going it alone: Running a business can be a lonely and scary experience, and sometimes, you might feel doubtful of yourself. Still, getting into partnership because you are not confident in yourself will probably lead to failure.
- Lack of financing: Sometimes, you might decide to get into a partnership because you don’t have enough money to run your business. However, doing this can result in power struggles and resentment, especially if you did not properly set out each person’s roles and responsibilities.
- Connections: Don’t go into a partnership with someone because you are hoping to piggyback on their connections. If they pull out of the partnership, your business will be as good as dead. Instead, you should focus on building your own connections.
6 IMPORTANT THINGS TO CONSIDER WHEN GETTING INTO A PARTNERSHIP
If you decide that getting into a partnership is the right decision for you, there are some things you should keep in mind if you want to have a successful partnership.
This will prevent you from investing your time and money in a business partnership that is doomed to fail right from the start.
Below, let’s take a look at six things every business owner should consider before partnering up with someone for business, according to six entrepreneurs.
1. Trust Your Intuition and Put Everything in Writing
Jack Canfield, CEO of the Canfield Training Group, author of NYT bestseller The Success Principles, and co-founder of the Chicken Soup for the Soul franchise gives successful partnerships credence for much of his success.
In the book The Success Principles, Canfield partnered with Janet Switzer, while he partnered with Mark Victor Hansen in co-authoring the Chicken Soup for the Soul series. He also runs his companies with partners Russ Kamalski and Patty Aubery.
Jack Canfield advises that you should trust your intuition when it comes to getting into a partnership. If you don’t like the person or trust them, you should not get into partnership with them. While these are subjective things, they can really save you from lots of trouble.
If it doesn’t feel right, don’t get into it. In addition, he says that the other person needs to have something they are bringing to the table that you cannot provide yourself.
The other thing Canfield recommends is that before starting the partnership, you should clarify each of the partner’s roles, responsibilities, compensation, boundaries, and exit strategy, and make sure everything is written down on paper.
Putting everything down in writing makes sure that everyone is on the same page, and that the understandings and interpretations of the partnerships do not change somewhere down the line.
Making sure that everything is written down is very crucial. Sometimes back, one of my friends got into a business partnership with one of his friends without writing things down. They just made a gentlemen’s agreement based on a handshake and scrawled down a few points on a napkin.
A couple years down the line, the napkin had long been lost, and both of them had a different recollection of what their agreement involved.
Without anything to help them navigate this conflict, the result was a very messy resolution, and their business died in the process.
To avoid finding yourself in such situations, you should always make sure that everything you agree to is put down in writing.
2. Know the Other Person for More than a Year
According to Tai Lopez, an investor, business advisor, and head of an eight-figure online empire, it is important to know your prospective partner for at least one year before getting into a partnership with them.
Tai Lopez compares getting into a business partnership to a marriage. You wouldn’t meet someone today and get married to them next week. You first have to date them, get to know as much about them as you can, and then get married if you feel that the two of you are compatible.
Similarly, Tai advices that you should spend some time knowing the other person.
He advises knowing the person for at least a year because various psychological studies show that a person will reveal their true personality within a year.
Why is it so important to know the other person for a year before getting into a partnership with them?
In the world of business, you will often come across people who seem like they are very well put together.
They have big ideas and are capable of articulating these ideas in ways that sound very convincing. At the end of the day, however, businesses are not built by ideas and mere talk. They are built through hard work.
Taking the time to know the other person allows you to judge them not based on their words, but based on their actions.
When you have interacted with someone for a year or more, you will learn about their work ethic, whether they have the commitment to put in the hours or whether they are just offering hot air.
This is enough time to allow you to evaluate whether they will be able to pull their weight, or whether you will be adding a burden to your business.
In addition, this is enough time to get information and credible references about the business experience they claim to have.
Just like you might go on a couple dates with someone and then decide that they are not the one for you, Tai Lopez recommends doing the same for potential business partners.
If you realize that the person does not have the commitment or is not capable of pulling their weight, don’t get into the long term commitment of a business partnership with them.
In addition, Tai says that you should clearly outline the roles and responsibilities of each partner, otherwise you might find yourself doing all the hard work while your partner simply enjoys the benefits.
3. Use Math, and Don’t Forget to Have Fun
The right partnerships can be a blessing to your business, but the wrong partnerships can easily turn into your worst nightmare.
According to Roberto Orci, a Hollywood screenwriter and super producer with TV shows and movies that have grossed in excess of $5 billion worldwide, the key to finding the right person to partner with is using math. Not just any math, but the right math.
Orci says that when choosing a partner, if one plus one equals two, then that is not someone you should partner with. For the right partner, one plus one should equal three.
This is another way of saying that a partnership needs to be greater than the sum of its parts.
Otherwise, if the partnership between the two of you does not lead to something greater than what each of you can do individually, you are better or hiring someone to do that or outsourcing that part of your business.
Orci also recommends that you should look for partners who are more skilled than you at certain things. Very often, people are unable to tap the power of great partnerships because of their ego.
If the other person is more skilled than them, they feel threatened by this, which unfortunately keeps them from achieving a grander vision. Like David Ogilvy, the “Father of Advertising” once said, you should hire people who are smarter than you. The same applies to your partners.
Finally, Roberto Orci reminds entrepreneurs that they should not forget to have fun while getting into a partnership.
Just like getting into a marriage, the business partnership will become a constant part of your life, and it will not always be easy.
There will be challenges, and you will often be tested. If you are not having any fun, that partnership will not survive.
4. X-Ray Their Brain
For James Swanwick, CEO of the 30-Day No Alcohol Challenge and Swanwick Sleep, before getting into a business partnership, he asks his potential partners to take both the dark triad and the HEXACO personality tests.
According to Swanwick, these tests are like getting an x-ray into the other person’s brain. Swanwick says that he likes to know the personality traits of the other person because he, like most of the other entrepreneurs on this list, believes that a business partnership is quite like a marriage.
Swanwick also says that he prefers getting into partnerships with people who have skills that are different but complimentary to his own, but share the same vision as him. For instance, if you are an extroverted person, he recommends that you should find a partner who is extroverted.
If you are the kind of nitty-gritty person who keeps behind the scenes operations running, he recommends that you should find a partner who enjoys being the face of the company.
Swanwick also cautions against getting into a partnership with too many people.
Like the saying goes, too many cooks will spoil the broth. When there are too many people in the partnership, there will be too many egos and too many conflicts to deal with, which will slow things down.
He recommends that a good partnership should have two or three partners, but not more.
5. Make Sure You are on the Same Page Right from the Start
According to serial entrepreneur and entrepreneur advisor Chris Plough, you should ensure that you have the same goals with your partner before you start the partnership.
Being on the same page right from the start minimizes the likelihood of conflict of interest in the future.
It will also help you to determine whether the two of you are compatible and whether it is worth it getting into partnership.
Chris Plough opts to get into relationship-based partnerships that are win-win and long-term. To ensure that they are on the same page, he sits down with his prospective partner and discusses two things. The first thing is core values.
Here, both he and the partner check whether their core values and other key values are aligned. This allows trust to develop and also provides something to go back to when things get difficult.
Second, they also share their business baggage, including what they expect from the partnership, the commitments they are going to make towards the partnership, the desires for the partnership and any fears any of them might have, and so on.
This way, this business baggage can be addressed during the planning stage, rather than when conflicts arise.
6. Don’t Be Afraid to Walk Away
As someone who struggles with difficult conversations and has a fear of confrontations, Phil once let a partnership go on for too long, even though he had already discovered that this partnership was not the right one for him.
This resulted in a lot of unnecessary chaos and lots of wasted time and energy, which could have been spent elsewhere. Therefore, he advises that if you feel a partnership is not working as both of you expected, don’t be afraid to end it as soon as possible.
While partnerships can help create some of the strongest businesses, the wrong partnerships can also lead to the failure of potentially successful businesses, as well as a lot of wasted time, money, and effort.
To increase the chances of success in a business partnership, there are a number of things you need to consider before partnering up.
According to the 6 entrepreneurs covered in the article above, you should trust your intuition and put everything in writing, know your partner for more than a year, use math while choosing your partner and have fun while at it, understand your partner’s personality type, make sure you are on the same page right from the start, and finally, don’t be afraid to walk away if things are not working out.
Some say that a book is waiting to be written in all of us. In the past such inclinations might have …
Not many people know what a Service Level Agreement actually is but as the name implies, it formally …