The continuing fights between Mark Zuckerberg and the Winklevoss twins over their share of Facebook shows choosing partners to help you establish, fund and grow a venture is one of the toughest things in business.
Good partners are a formidable combination. Together two, three or more well-matched businesses partners with complementary skills can give a start-up huge advantages. Warren Buffet and Charlie Munger at Berkshire Hathaway are a good example of business partners whose skills and personalities build on each other.
Sadly, those perfect partnerships are rare and all too often the differing personalities coupled with the financial and emotional strain of starting a business lead to the partners falling out. So what is it that makes the perfect business relationship?
All of us have weaknesses, in business these can manifest themselves in things like an inability to see bigger trends, too much focus on detail and – probably the most common of all – a boredom with doing paperwork and accounts.
The best partnerships are where each party adds something to the team. One partner might do the “big picture” strategic work while another focuses on the detail orientated operations. If you can find one that loves doing the books, marry them and do everything you can to retain them in your business!
The flipside of having complementary skills is that each partner has to be tolerant of the other’s weak spots. In any relationship, business or personal, that understanding of a partner’s weaknesses is essential to success.
All of the partners have to respect each other’s views and strengths. The moment one partner feels they are not being valued, even if it is only a perceived lack of respect, the relationship is heading for the rocks.
In many small businesses, the biggest cause of friction is one partner not putting in an equal contribution. If all parties aren’t putting in their fair share of labour or capital then the arrangement is going to hit problems, particularly if the venture is successful as we’ve seen with the Facebook disputes.
Unequal contributions hurt, particularly in small businesses where one partner may have contributed a far greater slice of their capital or time than others. This is often the problem where some of the partners are working full-time on the business while others have corporate jobs and can’t put in the hours required to be equal partners.
Some friends of mine had a falling out over their business when one of them found they couldn’t continue to juggle a successful corporate career with a running a start-up as a part-time job. The others in the partnership were running the new venture full-time and were severely unimpressed with the threat to several years’ hard work on their part when they too could have been chasing a big business salary.
The worst possible small business partnership is where one of the partners subsidises the business from their other income. Another friend of mine subsidised a cleaning business for two years while his partner forgot to put in invoices or quote for new work. When the business folded, my friend lost most of his money from those two years.
People go into business for all sorts of reasons: some for love, a few to build empires and others with the expectation of becoming billionaires. Many of us find ourselves building businesses because we’re unemployable anywhere else. Having a common vision of where you want the business to go is also essential or again the partnership will fall apart over those disagreements, often at the worst possible time.
A business partnership is very much like a marriage and can be just as expensive to undo. Choosing the right business partners can make the difference between a middling small enterprise and a fantastic success. The right partners are a great asset to your business, but choose carefully.
Paul Wallbank is one of Australia’s leading experts on how industries and societies are changing in this connected, globalised era. When he isn’t explaining technology issues, he helps businesses and community organisations find opportunities in the new economy.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
