For many years I worked on my own and enjoyed the flexibility of having no one to answer to, other than my clients.
Working and making money online on your own for many years can be lonely though. So, at times I decided to join forces with other people to create a business that wouldn’t be so dependent on myself and to be able to scale.
Having business partners to bounce ideas off can really help to grow a business, but sometimes can have the opposite effect and cause stagnation and even a dysfunctional business.
I have set up businesses with friends, friends of friends, and with clients in the past – in total three businesses and several joint ventures.
In this post I outline three main things I learned from my experience of being a solopreneur, business owner, and employer and working on joint ventures over the last 20 years.
Can Business Partners Work?
For sure. They do and can work very well.
I know of several business partnerships from friends that have worked for many years and gone from strength to strength.
Of course, I am not in their business and don’t know the day-to-day issues of which they no doubt face. But they most likely work because they avoid most of the pitfalls I outline in this article.
A great article outlining 7 tips for making business partnerships work can be found here.
On balance, work partnerships haven’t worked for the long-term and have ended after 2-3 years. Although the last business partnership lasted for 6-years and worked very well for the first 3-4 years, after which time it felt more like we were trapped into a commercial marriage.
The fact is after many years I know why the business partnerships I have formed in the past aren’t for me.
Don’t Get into Business with Friends
It’s certainly a cliché but I have found this to be true on a couple of occasions. So, these days I make a big effort to not mix really good friends with business.
Getting into business with an acquaintance can work as long as the parameters are well and truly established into the responsibilities and what happens if it doesn’t go as planned.
Mixing money and friends can get really messy and have a huge impact on friendships.
This is probably the biggest no-no for me now. I will very unlikely get into a business partnership with a good friend and even think twice about a business relationship with an acquittance.
Having joint ventures with clearly defined work roles and responsibilities is different and can still be very productive and profitable.
Sharing the Same Vision
Ensuring a business partnership lasts and stays the course you need to share the same vision.
In some cases, the scale of your new venture may be out of sync with your partner. This has certainly been the case with me on a few occasions.
In my last business, I was keen to keep a lean business utilizing a more outsourced workforce in contrast to my business partner who was keen to have an office of busy staff. One approach is not necessarily better than another as it very much depends on your preference.
Having for years worked remotely and not within a corporate or office structure I much prefer the nomadic work style. That said, I do like using office spaces, like the co-working space I use in Malaysia, where I frequently work from.
Building a big business with lots of staff to be managed is not for me.
Clear Division of Labour
Forming a business partnership with someone who has the same skillset doesn’t make sense.
There should also be a clear distinction as to who does what and when.
Creating a job description for the business owners is a good idea to consolidate exactly the responsibilities of each party.
Also important in deciding who does what are lifestyle differencesKirsten Lambert and Joan Ripple, founders of Hingham
Although clearly defined there should be some flexibility built-in and taken for granted. In the end, both parties should be working towards a common goal, which should be clearly identified in your shared vision.
50 / 50 Equity Share Rarely Works
Do you know the saying too many chefs in the kitchen? Well, it’s the same in business, having more than one decision maker means everything gets run by a committee, and we know what that means.
Yes, nothing gets done very quickly!
Out of a sense of fairness and partnership, ALL apart from one venture has been on a 50-50 equal basis. The only exception was the profiling business I was involved in where I owned 10% of the company and subsequently got shafted and saw very little return from my investment.
Having an equal split can seem like a great idea from the outset but when decisions need to be made can easily end up in a stalemate.
If equal equity is a must then the division of labor and dispute resolution procedure should be even clearly written down.
In many cases in my working relationships, less time was spent in establishing these at the outset. This ALWAYS caused a headache further down the road when situations arose that tested the business.
All Your Eggs in One Basket
On a few occasions, I consolidated all my online work into a business partnership to keep things similar, e.g. I was working in one business only.
Whilst this seemed like a good idea if the business partnership fails then untangling the business can be messy.
Thankfully the one time I did this with the consultancy clients I moved into the business, I ended up keeping them as clients once the partnership ended.
In all but one case leaving the partnerships, I have set up we left on an amicable basis without the need for getting solicitors involved. Only in one case where I have cheated out my agreed-upon investment in the partnership did I consult a lawyer, but the case would have taken too much emotional energy for what was likely minimal return.
Sometimes it pays both financially and emotionally to just walk away!
Exit Plan Essential
One thing is always certain in life, circumstances change, and you cannot rely on family and work situations to remain the same.
In my case, during the last business partnership, I got married and had two children. My business partner at the time had no children and his lifestyle and financial circumstances were very different from mine.
This led to my values changing and previous considerations were less important. Even from a practical standpoint, I was reluctant to work 60 hours plus working weeks when I have a family.
So, having an exit plan if one or other business partners wish to leave is crucial. Without one there is a real risk of infighting and driving the business into the ground.
Thankfully in my case, with my last business, we had the groundwork laid out for this scenario.
The exit strategy for us in this order:
- to sell the whole business;
- one party to sell to the other;
- one party to find another buyer for their equity
My business partner was keen to continue with the business himself without partners and so bought me out.
Whilst it wasn’t a perfectly laid out exit strategy we had and still involved negotiating the exit plan, it was reasonably quick to implement without the need for long-drawn-out discussions. In fact, the whole process from agreement to handover and exiting took around 2-3 months!
My Final Thoughts
My experience with business partners has been mixed. Most have ended amicably and only one partnership did I get ripped off, so, on the whole, it’s been okay.
I enjoy working on my own and find that building a strong network of like-minded professionals is better for growing my business. This works better than having business partners for me – the feeling of having a commercial marriage is not one I enjoy.
It’s taken me a long-time to figure this out.
This is why over the last two years I have resisted attempts to team up with new partners as I wanted to go the lean start-up route and develop a business on my own. I have now started my journey with my super greens supplement – SuperGreen TONIK.
My Business Partnership Rules
So, what have I learnt in 20-years of working as a solopreneur, business owner and employer? Here are my brief 5-rules that I aim to keep as my guideline for forming business partnerships in the future.
- No business partnerships with close friends or family
- Same vision for starting and growing business
- Clear division of labour within the business
- Never invest ALL income streams into one business partnership
- Clear exit strategy
Do you have experience working solely and within partnerships? Positive or negative let me know how it worked out for you and what you learned from the experience in the comments below.