I’ve entered and exited two business partnerships over the last 17 years, and I’d like to shed some light on those experiences. I’ve learned two big lessons from my experience both times around.
First: A great family tie or friendship does not necessarily translate to a great business partnership.
And the second one is two-layered: It’s not always black and white, look one level deeper and listen to your gut. Ok, three-layered.
Here’s a quick overview of how my first partnership came to be and then came undone:
I was 27 years old and a close family member of mine proposed that we set up a business together. I thought it was a great idea, I thought we’d be joining forces to create something bigger and more impactful, and I was pretty fired up.
But I had a small nagging feeling right from the get-go. I knew that my business partner and I were two very different people. We had different mindsets, different goals, and different attitudes towards risk.
Different attitudes towards risk – that’s a big one.
To a certain degree, it brings out a positive balance. But when it’s extreme, then the two opposing energies result in bad decisions, significant clashes, and the beginning of the end.
Over time, our differences overshadowed the growth of the business. One such instance is when my business partner decided to withhold some money that was accidentally sent to us by one of our insurance partners.
My immediate response was that we should alert them of the mistake and return the funds. My business partner, however, had different plans. He thought of it as a bonus if the mistake went unnoticed – a situation that I was extremely uncomfortable to be a part of.
I knew then that this wasn’t going to work in the long run, and that should have been my cue out. But I held on instead and ignored my instinct. This discomfort around money became a problem for us when a few years later, I decided to exit the partnership too.
The business had absorbed parts of my personal earnings for its running expenses. We only had a verbal agreement in place that this money would eventually get paid back to me.
Yep, Business 101, right? Put it down in writing. Always.
Let’s just say it was a bitter struggle for me to recover even some part of that money after I exited the business.
Eight years into the partnership, I also had my coach, Dan Sullivan, pose a question that got me thinking. He asked, “If you had to go back and pick a partner again, would it be based on strengths and weaknesses or blood and relationship?”
I knew I’d made a grave error by going with the decision to go into business with someone just because of blood and relationship.
The worst part? When this kind of thing crumbles, you lose much more than money. It cost me the relationship, too. The partnership came to a dramatic end, with money left unrecovered and sour relationships in the air.
Now for Business Partnership No.2.
This time, I felt wiser for my experience. I knew what I had to watch out for. I knew I was looking to compliment my strengths and weaknesses.
So with this very logical reasoning, I found my second business partner. This gentleman is an absolute expert when it comes to financial planning, being detail-oriented with theoretical knowledge on products and services. He crunched the numbers, was thorough with paperwork, and paid great attention to detail. That left the bigger picture in my hands – and that’s what I am — a bigger picture guy.
So we set off doing business together, each within his strengths. But when we started to serve our clients, things came to a screeching halt. Although my partner was an unquestionable subject expert, he fell drastically short when it came to people skills and empathy.
My clients were used to a warm, personable relationship with me. They’re used to connecting with me as a friend, an advisor, and our families getting to know each other even.
But what my business partner offered was cold, hard numbers and policy documents. His meetings were often dry, matter-of-fact, and lacked any of the care that became a signature part of what I do as a Financial and Life Insurance Advisor.
That was my ‘It’s not always black and white’ lesson. On paper, our partnership seemed like a dream. It checked all the practical boxes. But there’s a soft, human element to business that can’t be ignored.
And those are my big take-aways from two business partnerships.
I have clients and friends who have struggled to find the right business partner, or worse, struggled to force an existing partnership to work. Don’t get me wrong – like any good marriage, a great partnership takes work. But like any good marriage, the work should pay off.
The way I see it, with a business partner, you’re looking for similar money mindset, trust and reliability, a good understanding of each others strengths and weaknesses, stability, similar long-term goals, unwavering support and two-way empowerment.
That’s a lot to ask for, I know! But that’s what makes this a hard decision.
Above all of this, I believe that a business partner over the years will be a significant part of yours and your family’s life. Meeting their family and introducing them to yours is an equally important part of this relationship.
And to foolproof this, remember to document all arrangements. Verbal agreements don’t exist and are not a sustainable business practice.
What qualities would you say are most important in a business partner?