Do your business partnerships feel like a bad episode of “The Dating Game”?
Instead of your dream date, Mr. Cash Cow, on the other side of the divider, you’ve got distractions, numbers in disarray, and profit killers.
What’s a girl business to do?
The Numbers Whisperer® to the rescue!
Three common reasons business partnerships fail, and how to avoid them.
This post is part of the February Word Carnival. The topic for the group this month – All You Need is Love. February is the month of l’amour, and the carnies do not let you down.
Look for a Business Partner not a Business Clone
Alternate Title: Dating Yourself is Weird and Wrong
Having a business partner should make things easier, right?
Imagine this for a minute. You’ve found the perfect partner, they’re just like you! They have the same likes, dislikes, skills and opinions. What could be better? A new partnership is born.
Shortly after you launch you realize both of you hate to sell. Maybe numbers are your joint nemesis. Or you discover that neither of you are any good with the nitty gritty details.
Suddenly your weaknesses are amplified, exacerbated by two people who can’t (or won’t) address them. Instead of being able to draw strength from your partner, it’s like trying to prop up a building with popsicle sticks.
Before jumping into a partnership, discuss who will handle all the crucial aspects of the business. Then write it down.
Who has the sales expertise? Marketing & branding? Finance? Product development? Taxes? Legal? If neither of you are able to handle a certain function do you have the funds to outsource?
Sealed with a Handshake is Heading to He&$ in a Handbasket
Alternate Title: But he looked so nice and normal. What could go wrong?
This one is simple. Have a partnership contract.
Then why do so many people enter into a partnership or joint venture without a signed contract?
Here’s just a few that I’ve heard;
- Asking for a contract looks like I don’t trust them. Why would I go into business with someone I don’t trust?
- But we agree on everything, why do we need a contract?
- I can’t read or create legal documents, so why have one?
Let me count the ways these situations are doomed to failure. Nevermind, we don’t have time to do all that counting! By putting an agreement in writing you can ensure that your potential partner is really hearing what you saying. And vice versa.
Many honest miscommunications occur in business. Often when a discussion is documented in writing discrepancies arise. Otherwise why would there need to be meeting note revisions and approval?
The simple act of putting things in writing often brings partnership mismatches to light. From my perspective I know I’m operating with full disclosure and honesty. So why wouldn’t I be willing to put my commitments in writing?
(Psst… have you signed up for my weekly newsletter? Free resources, finance terms decoded and more delivered to your inbox free every week. Ahem. Carry on)
Partner with a Fighter NOT a (Day) Dreamer
Alternate Title: Don’t fall in love with love. Ideas are fun, but success takes hard work.
When was the last time someone walked up to you (unprompted) and said, “Hey I’d like to buy the idea you just thought up.” When have you ever heard of someone posting an idea online and getting gobs of money thrown at them?
Never.
As Carol Roth says in her book, The Entrepreneur Equation
A penny for your thoughts… if you’re lucky.
Without clear, well thought out action, ideas have no value.
Has your potential partner demonstrated that they can act? Have they successfully launched and sold at least one product or service? If you see evidence of “failure to ship” it’s a sure sign you’ve got a dreamer on your hands.
Are they already talking about the second, third or even fourth product you could offer when the first is no more than a sketch on a napkin? Do they resist discussions about the nuts and bolts of implementation, waving it away as mere details?
With a dreamer as a partner you’ll be doing all the work, but only getting half the profit. On what planet is that a good deal?
Final Thoughts
Partnership with the right person can be an amazing, profitable experience. A bad fit in romance or in partnership will drag you down, miring you and your profits in the muck. Choose wisely.
Have you had a partnership fail? What are warning signs you see looking back?
Nicole Fende is The Numbers Whisperer® and author of How to be a Finance Rock Star: The Small Business Owner’s Ticket to Multi-Platinum Profits
You could so equally change partner to client in all these scenarios Nicole and come up with the same disaster and the same solutions.
If you don’t spell out all the crucial aspects of an expected outcome and who is responsible for what, then especially if both you and your client have a weakness for details for example, the outcome is unlikely to happen! Or it will take so long, someone is going to lose it along the way.
You are so right, while partnerships are essential to multiplying your business success, they need to be handled correctly from the start. There’s a carnie blog on that topic I’m certain.
Propping up a building with popsicle sticks is an analogy worth framing!
Sandy is SO right about that! Our customers need to be selected as carefully as we might choose a partner. I’ve had to deal with both kinds of relationships-gone-bad and you certainly learn quickly that a little extra work on the front end will make all the difference down the road.
Tea you make a great point about selecting customers. It’s easy to think wait I want any customer. Can they fog a mirror? Do they have a cerebral cortex? Sign ’em up!
Then the rubber meets the road on execution and oh boy is it painful, if not an outright disaster.
Sandy you are absolutely correct that all three also apply to a client relationship. Partnerships can be an amazing way to supercharge your profits, IF done correctly.
Glad you like the popsicles analogy. I was struggling to find something completely sill and ridiculous when that just popped into my head.
I’ve had some of *the worst* experiences with partnerships when we went in without a contract.
I’ve created entire business ventures that ended up with me ousted (or praying for death depending on the situation). And all the while, the clients either have no idea or there’s absolutely no new work coming in to the company because of it.
I’ve had business partners misrepresent their skill sets – so even though you thought you were covered (as your first section points out), you weren’t! It’s absolutely right that without someone to initiate the great ideas you come up with, there’s no hope. Not only that, but you have to both agree on the actual implementation phase as well: what does it look like, how long does it take, what is the indicator of success/failure/done?
All awesome points and things I’ll take with me into my next partnership! 🙂
Ouch – ousted or praying for death. That must have been one bad situation.
You raise a great point about someone saying they can do it when they can’t. I’m going to pull out one of my favorite quotes, “Trust but verify.” Oh you can do all the graphic design and layout? Great, I’d love to see some of what you’ve done recently to get ideas for our venture.
When talking with potential partners, or in the early phases of testing the market I work with my partner to come up with the minimum results I need to consider it worthwhile. Then I like to find a second number that means I’m willing to enter phase two. That helps everyone understand the standards.
“Without clear, well thought out action, ideas have no value.” – so true. Love the way you spell this out, Nicole.
Well Sharon I’ve known my fair share of dreamers. I even have a bit of that in me, as I can always see endlessly possibilities in life.
Fortunately my bottom line focus keeps that in check 🙂
Been known to have the occasional dream myself, Nicole. 🙂
I bet this is a lesson a lot of people learn the hard way! :::whistles and looks off into the clouds::::
The “get it in writing” part is the killer. It does seem an awful lot like a prenup, doesn’t it? If you REALLY love me… you would sign/wouldn’t ask me. So it goes both ways.
I just went through one of these headaches that is going to cost me a lot of time and money undoing by the time its over. Sigh. Live and learn though? Or, I hope a lot of people will read your post first and learn before they make the mistake. It makes a broader point, too, that friendships and business don’t mix. When it comes to business you have to be business.
And I love your point about finding someone who is “not you”. At least that’s one thing I got right! I am on a constant search for someone who will do the things I don’t want to 🙂 (um… math, anyone??)
Oh Carol Lynn don’t think for one second that I’ve never made any mistakes! For me the Dreamer one is hardest to spot because I’m an idea person. Yet I also have this burning desire to ACT.
P.S. If you’re still looking for someone to help with math, I’m so there!
I’m with Sandy and Tea on this one. Power partners and clients can both be viewed with rose colored glasses and when the glasses come off the scenery can look pretty scary. Here’s my question re getting in writing. How do you find the balance between a seriously hardass contract that can literally scare prospects away (had that happen) and effectively protecting your business?
Hi Clare, that is a great question on contracts.
Here’s what I do to handle it for my consulting clients. After my initial free assessment (generally about 30 minutes) I write up a proposal. That proposal has three sections; my summary of their current situation, bullet points of their key needs, then a detailed action plan on how I can meet those needs. That third section includes deliverables and pricing.
Potential clients get that, and have a chance to review, give feedback,ask for changes etc. I submit a revised proposal.
Once they’ve approved the proposal I take it and transfer it IN FULL to my boilerplate contract under the SERVICES section. I also update the FEES section. The client can see that everything we discussed is there and that allays any concerns they may have. (Batting 1000 for those agree to move forward and have not yet seen the contract).
Hope this helps.
Nicole, I agree completely about the necessity of having a contract that lays out all the important terms of the collaboration. I had one when I coauthored 100 Classic Hikes in Northern California, even though my coauthor was my brother!
John we are absolutely on the same page. My Dad is the one who hammered home the “get it in writing”. When I was younger he loaned me money, and guess what? We had a contract!
This is a great post, Nicole – and it covers a lot of really useful territory. I love Sandy’s point about clients – actually, I’ve never had a business partnership so I’ve never had any nightmare experiences with that, but it reminds me of doing trades with people (always get a written agreement!) and/or working with friends as clients. I think your main point in section #1 is good, it’s very rare that people who are super similar work well together in actuality – much better is pairing an action-oriented person with an idea-oriented person (wasn’t there a Copyblogger article about Zoe and Mal from Firefly that talked about this?).
Yes Michelle it’s a hard balance to find between similar enough so one of you doesn’t feel like the other is always speaking in some foreign language, yet different enough that you can offset each other’s weaknesses. Same for clients, if they are too similar it’s bound to end badly.
I’m LOVIN’ this post, Nicole!
I’ll spare you and your loyal readers the sordid details (would require tens of thousands of words … with an equal number of expletives).
Instead, allow me to say:
DON’T EVER enter a four-person partnership on product development!! If you think a two-party collaboration is challenging, try adding two more people to the mix, and you’re guaranteed to lose your sanity … two days into it!
Sorry to report I wasted nearly seven months of my valuable time and energy on just such a partnership and guess what? Ultimately, no product was ever created and a couple of relationships were destroyed. 🙁
Two thumbs up, kudos, a tip of my hat, and a big fat AMEN for your post, Nicole!!
Well Melanie I feel your pain. I did try a three person product dev partnership. It might not take 10,000 words to describe but needless to say it went nowhere. The only good news in that case is that although there were discussions for months, it never went to the next phase. I wanted a contract before pulling the trigger and a contract never materialized.
Whew! Count your blessing and your lucky stars, Nicole. Without a contract, thank goodness that three-person collaboration never went any further.
I must be honest. It’s comforting knowing someone else walked this same (going nowhere) path. Thanks for sharing your story!
Thanks for the great article ! I just started following you on Twitter and added your blog to the long list of PR blogs I subscribe to. Looking forward to reading more from you!
Thanks for stopping by Rosy. Looking forward to having you around 🙂
I know we’ve talked about this issue quite a bit and have both gone through our fair share of ….um….difficult partnerships. Which is why we appreciate each other so well. We compliment each other and have the same goals. And of course we both look great in a cape!
We did both have to kiss few frogs in the partnership department, didn’t we? My favorite part about the cape – you can swirl it dramatically when you leave a room.
your article is really helpful and make this process easier.Thanks for sharing!
Hello Celisa – Glad you enjoyed it!
Great shot, I’m very appreciate your tips, Thanks for sharing this post.
Hi Saanvi,
I *love* Indian food – in particular Dahl with Paratha Bread. However I live in Minneapolis in the U.S. Any suggestions for me?
Excellent post. You really dialed that in. It’s the simple principles that worked for people that have already been where we are heading and desire to be that we should pay close attention to.Thanks for keeping it real and I always look forward to your next post!
Thanks for stopping by Jaimie. If you do a lot of posts on iPhone apps may I recommend a topic? What to when they double (5X) bill you for the same app. Yes it has really happened to me, what a mess!
This is something I need to keep in mind when the need to venture into partnership land comes along.
Your writing pack a punch, Nicole. I’m a new fan. 🙂
Hi Maricel – glad to have you! I’m a career mom online also. We’re always looking for ways to save on time.