A Guest Post by Gypsy Rogers
After ten years of happy marriage to her fifth husband, mom finally imparted some of the wisdom she acquired through a lifetime of relationships . The two most important pearls she shared are:
1.“Don’t pick your relationships because someone has qualities you like. Everyone has qualities you can find attractive. Pick them because their faults don’t drive you crazy.”
2. “Divorces are made before you say ‘I Do’.”
Having experienced several failed business partnerships (and two divorces) myself, I believe that establishing relationships with business partners is nothing short of a business marriage. In fact, there’s a much stronger incentive for dishonesty in the business relationship – hence the reason you’ve formed the relationship in the first place: money.
There’s always this initial period where both of you are excited about what the other brings to the table. You finally found someone who “gets it” and you start courting each other by flexing your “I’m a cool partner to have” muscles. Then comes the “love is blind” thing, where you ignore each others faults; especially dangerous if you are the ADD type filled with vision and optimism, because then all you ever see is upside potential. Chances are, you won’t even get the opportunity to meet your partners parents to know what you’ll end up like in 30 years.
That was then
My first ever business mentor came from a different time, a time when your word was your bond and a handshake was as good as a contract. I wish it was still that way but believe that it’s unrealistic in today’s day and age for a variety of reasons:
1. First, not everyone keeps their word (truer now that ever before).
2. Second, not everyone remembers what they said in the same way you remember.
3. Lastly, it’s hard to convince your partner’s heir of what their predecessor agreed to behind closed doors.
So, the best piece of advice I could ever give the would be partnering entrepreneur is:
Put the whole deal in writing
It all sounds good since you love and trust each other (read: honeymoon). Putting the whole deal in writing reduces the likely hood of “It was your job to do X” or any sly moves on ownership interest down the line.
Don’t race for home base
This isn’t high school! Ease into a partnership in phases with each person having deliverables at each phase.
Make sure it’s not all on any one person during the first phase, whereas contributions should be as mutually balanced as possible. This is very important in the early phases to see how reliable this partner is; you don’t want to have hundreds of hours invested only to find out your partner is a deadbeat. Make sure everyone has skin in the game.
Now that your thinking in phases:
Devise an exit strategy
Exit strategies are a strange beast. They are probably one of the hardest maneuvers to craft and it is way too easy for the process of preparation to result in hurt feelings. Since this first phase should really be your trial to demonstrate how well you do/do not work together, the first one is the most important. In the eventuality that the probationary period makes you want to reconsider, you need to have your contract prepared in such a way which would allow for you to be able to say at the end of a lame honeymoon, “No, really, it’s not you, it’s me…” so as to not hurt your hapless cohort’s feelings and allow them to save face. The goal being to part in part in as positive of terms as possible.
After you have all your exits cased:
Decide who the head of the dragon is
Don’t fool yourself into the trap of believing you are equals. Really, even if you think you are, you aren’t. You never were and that’s the point. Since you can’t wine and dine forever, there will inevitably come a place in time when you will disagree. If you have not prepared for how to proceed from there, a stalemate will leave you at an impasse and you will be over before you’ve started. You need to first decide who carries the greatest responsibility of being the final decision maker.
The final tip I will give you before you skate across that floor is:
Let a third party handle the checkbook
More marriages fail because of money than anything else and there is absolutely this risk with your business relationship. What you need is a neutral third party (not your buddy, or your partner’s buddy) who has a license at stake to manage the checkbook and keep everyone equitable. Remember, the perception of impropriety can be just as damaging to a relationship as impropriety is itself.
In the end
Partnering is a beautiful thing when it works; you can multiply your resources, compliment abilities and pool talents in a way that benefits everyone! That being said, it is very ugly when it fails. I’ve thrown so much of my life and my money away trying to avoid bankruptcy, lawsuits, immorality, (and even prison) with now ex-partners. My sincerest wish for you is that with an appropriate level of business partner relationship understanding and caution, you can sustain successful and rewarding business marriages .
*Quintessential is a Small Business Consulting Operation, which often negotiates equity partnerships with pure play Internet startups.