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Every now and again, a new thread will start on UKBF about a partnership gone wrong. Whether it stems from money issues, partners not doing their fair share of the work, or disagreements over running the business, what started as a promising new venture can quickly turn into an uncomfortable and stressful situation.
Ending a partnership and dividing up the debts, and any remaining profits, can also be a tricky legal process. And with all partners personally responsible for any liabilities, there’s a lot at stake.
While there’s no way to guarantee that everything will go smoothly in a partnership, choosing the right person to go into business with can certainly help.
UKBF user iDigLocal says there are two simple questions to consider about a potential partner: “do you trust them”, and “do you need them”?
“Answering no to either one of these questions means that you should walk away.”
Being able to answer the first question might depend on how long you’ve known the person, and their track record.
That’s not to say someone who has failed in the past should be ruled out as a potential business partner. On the contrary, it could be an advantage to work with someone who is upfront about the times they’ve failed, and has learned something from them.
Responding to the same thread, Scott Hawksworth said:
“Great partners are honest about their knowledge and skills, and more importantly can demonstrate a willingness to learn and grow when they don't know things.
“I'd much rather have someone who admits their limitations than pretends they know more than they do.”
To answer the second question – do you need this person as a partner? – think about the skills that would be valuable to your business.
Ideally, they should bring something new to the table and complement your own skills. Working in partnership with someone who has the exact same skillset as you is unlikely to make the most of each partner’s talents. For example, if you’re running a web design agency and your strengths lie in graphic design, it could make sense to team up with someone more technically-minded.
Going into business with family or friends can often look like an appealing option. It’s someone you know well, who you’ve spent plenty of time around, and who you have no trouble communicating with. What could go wrong?
Statistics show the majority of two-person business partnerships are made up of one man and one woman, suggesting high numbers of husband-and-wife partnerships.
TheoNe said this could be a good thing: “I would be very supportive of a husband and wife team entering the exciting world of entrepreneurship. You know each other's strengths, weaknesses and which one of you would excel at different tasks.”
It’s also a risky decision, however, and it’s not for everyone. The day-to-day stresses of running a business might only be intensified if they overlap with your personal life. And if things go wrong, your relationship with your partner could be put under significant strain.
Essentially, the same questions outlined above apply. Putting your personal feelings aside, would this person bring valuable skills to your business? Can you trust them to make financial decisions, and to put in a fair amount of work?
The partnership should be a business relationship before anything else, and you shouldn’t start a business with someone just because you get on, because you have family ties, or because your mum wants you to.
If you do decide to go ahead with the partnership, be sure to set out a formal agreement, agreeing each person’s responsibilities, how the profits will be split, and what will happen to the business if things go wrong.
It might not seem necessary at the time, especially if you’re confident the partnership and the business will be a success, but it’s nonetheless helpful for everyone to be on the same page when it comes to the way the business is set up.
Some would warn against entering a partnership in the first place.
In another recent thread about a partnership that didn’t go to plan, MBE2017 said:
“Partnerships rarely work out for most people, because sooner or later one feels they are working harder, smarter and to better effect than their partner. The resentment starts to build towards a break up.
“Having your own business is all about being in control of your destiny, your money and your future. I hope you sort things out, but in 50 years I have only seen a handful of partnerships succeed, but thousands fail.”
Running a business is hard work. Maintaining a working relationship under that pressure is generally harder. If you’re not willing to give up some independence and compromise from time to time, it might not be for you.