A business partnership is very much like a marriage. You begin with excitement, full of optimism for the possibilities that lie in front of you.
However, also similar to a marriage, there are ups and downs. The business relationship is great while the business is growing, while problems are getting solved and your levels of energy and motivation are in sync. But a partnership is quickly put to the test when business and personal challenges threaten to fray the connections that bind you together.
The health of your partnership plays a huge role in business success or failure, so being able to work well together and maintain a positive relationship is crucial. Unhealthy partnerships have been the demise of many many businesses. No one wants to end up with a toxic stew, waiting to eat away at the business. So how can you work to maintain good relationships?
Business partner red flags
It’s worth paying a quick visit to how we choose business partners in the first place. Hopefully, you’re among the many founders who are happy with their choice of business partner, but unfortunately, some have had to learn the hard way.
A friend of mine, Megan, had always wanted to start her own business, and had been working as a freelance designer online. She’d worked fairly closely with Melissa, a designer and assistant located in another city for well over a year. They’d never met in-person, but online they seemed to click. They had a shared idea of starting a publication for freelancers like themselves, and honestly, it had all the bones of a great idea as a resource for a growing community.
However, not long into the partnership, cracks began to show. Melissa became increasingly unfiltered and erratic, with unprofessional outbursts toward contributors they were working with, and arbitrary decisions made for the business. Megan was mortified by Melissa’s behavior on more than one occasion, and ultimately, opted to cut her losses early and exit the partnership.
The fortunate thing about this story is that Megan recognized some key red flags early, although as she later said, she wished she’d figured them out before kicking off the business together. At the stage she exited, she wasn’t losing much, however there are many stories of costly bust-ups much further into the life of the business.
As many as 50% of business partnerships are said to fall apart within the first year. This is one scenario in which failing fast can save a lot of pain and heart-ache. Those that fall apart later on, in well-established businesses, can take down an empire.
Some key red flags include:
- Lack of shared values. In the end, the values of your business should pull you together and help draw in clientele. It just doesn’t work if you don’t share the same core values.
- Conflicting visions for the business. This pairs up with those values – you need to be on the same page about your goals for growth, the markets that you seek to serve, timelines for key events and the role that the business plays in your individual futures.
- An imbalance in skills and/or experience. Ideally, partnerships are the meeting to two separate but equally valuable skillsets. Don’t choose a business partner simply because they were fun to hang around in college. Both members of the partnership must contribute essential skills. Check out ZenFounder podcast episode 38 for the story of how a friend-baed co-founder pairing fell apart for Anders Thue Pedersen.
- An imbalance of work ethic. No one wants to do 70% of the work to still only get 50% of the rewards! A careful delineation of roles and responsibilities is essential, as is equal “skin in the game”.
- Avoiding difficult conversations. Business partners need to have difficult conversations- it in inevitable. Emotional maturity and the ability to communicate clearly are among the most value skills in a business partnership. These “soft skills” require focus and intentional development- just like technical skills.
- Lack of transparency. You need to know that there’s nothing lurking in the background that could bring your business down. Many partnerships have gone sour over money issues, including hidden debts.
- Lack of formal agreements. These things need to be in place as a backbone of the partnership, including an explicit clause about how the partnership would be dissolved if needed.
People often ask me whether or not they should go into business with friends or family members. For most founders its a mute point. 90% of entrepreneurs go into business with someone they know, which makes sense when you consider that many business ideas are first kicked around informally and then mentally constructed using the skills immediately available to the would-be-founders.
My answer to the question of mixing family and business is the very unsatisfying “it depends.” A business partnership with a friend or family member will exacerbate every past hurt, feeling of envy, and corner of immaturity that live inside of you. And they can have a disastrous endings. Check out ZF podcast episode 35 to hear Anthony Eden talk about the implosion of his relationship with his co-founder and brother. Their business conflict permanently changed the landscape of their family.
On the other hand, going into business with someone that you’re already in a relationship with, already committed to, can eliminate some of the partnership challenges. There are plenty of successful companies founded by siblings, spouses or longtime friends. Perhaps the answer is to check against those red flags first, and to have a clear plan to manage any conflict. I encourage even the most committed individuals to have a formalized plan for how they will handle the business partnership if the personal relationship begins to go south. No one wants to believe that their relationship will fall apart, but my experience is that one of the best ways to prevent a collapse is to have a worst-case scenario plan in place.Conflict-avoidance is a red flag among business partners. Healthy conflict can benefit the business. Click To Tweet
Handling conflict with a business partner
Even the healthiest business partnerships will experience conflict at some point. Conflict is not bad. It is the natural consequence of two of more engaged minds weighing on an important topic from differing perspectives. Conflict can help us make key decisions or to see things in a new light. But like all situations involving elevated human emotions, conflict can have a constructive or destructive outcome.
First of all, accept that some conflict may be inevitable, and ensure that you have a good process to work through it as partners. Conflict avoidance can lead to poor decisions, a growing mass of resentment and a later blow-out. Avoided conflicts are a time bomb in your business. Tick tick tick tick.
Most conflicts (where relationships haven’t descended into hostility), can be resolved by a logical discussion between adults who have decided to stay calm and really listen to each other. Some tips include:
- Clearly explain the motivation behind your position. Exactly why do you feel that your way is the way to go? What assumptions, motivations, goals or fears drive your perspective? This can often help to uncover other solutions too.
- Be open and willing to listen. Many seeds of hostility or resentment are planted when some does not feel that they have been listened to. Be slow to dismiss ideas. Be slow to argue. Give your business partner the respect of hearing them out. Negotiations in business should never be a zero-sum game – if you’re willing to listen, there may be some middle ground or compromises each can make.
- Keep it civil. Finger-pointing or resorting to personal attacks never end well. Instead, ask deeper questions. Probe where the other person is coming from and open up the conversation to new potential solutions. An “active listening” session, where each partner listens for 3-5 minutes, without speaking or reacting, can be a game changer.
- Set aside uninterrupted time to have key conversations. Put the screens away. Focus on the conversation.
- Plan ahead to prevent potential arguments. Here’s an example; a common argument among business partners is where one feels that they’re doing more of the work than the other. If you know you’re heading into a busy period, clearly lay out roles and responsibilities ahead of time, so that no one is left questioning the division of labor.
- Ask for third-party help if needed. Professional mediators can do a great job of cutting through any personal agendas or feelings, to get to the heart of matters. In some cases, a third-party business mentor may be helpful too – it just has to be someone who is neutral in terms of interest in the outcome. Feel free to get in touch with the ZenFounder team if you need a third party mediator to sort through a conflict.
What if your conflict does boil down to incompatibility of vision and values? Sometimes that happens. Sometimes the best option may be to dissolve the partnership, or at least re-negotiate roles.
Conflict of vision and values can absolutely destroy business momentum and growth. Co-founders in deep conflict create a crappy situation for everyone involved with the business. Recognize and deal with this as quickly as possible.
Sometimes that conflict doesn’t need to mean a hostile environment. Let’s say, for example, you’ve been in business together a few years, but each have experienced different life milestones and changing priorities. If one wants the business to become a global rocketship and the other is feeling that they’d like a lifestyle business- those different goals need to be named and discussed openly.
It may be a difficult conversation, but perhaps the partner that wants more time away agrees to take a smaller role, or agrees to sell part of their share in the business. In any case, the conversation must be had.
Changing or ending a partnership, much like a divorce, can be horribly destructive or it can be an opportunity to move on with graciousness and maturity. The difference depends almost entirely on each individual’s capacity for health conflict.
Keeping a healthy relationship with a business partner
A healthy relationship with a business partner boils down to compatibility, maturity, and excellent communication. You shouldn’t be tiptoeing around one-another, but nor should you be descending into unfiltered screaming matches.
Shared vision and values draw you together, but conflict will be inevitable- its all part of the ups and downs of the entrepreneurial roller coaster.
Besides conflict management, look for opportunities to kick back together, where it’s not all about work. Partners who bond often find that managing conflict goes more smoothly. Eat meals together, have a regular co-founder retreat, spend time investing in the relationship. The better you know someone, the more likely you are to understand how they tick, and when not to take things personally.