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The Risk of Partnerships

By Jacqueline Drew
START Marketing Inc.
www.startmarketing.com

Over the years I‘ve dealt with many businesses run as partnerships, and getting a partner in your business can seem like a wonderful way to share the workload, and the financial risk.  While at first it might seem to give you the boost you're looking for…let me give you some examples of what often happens next:

• First example: While you've known the person as a friend for a long time, you had no idea what he would be like as a partner.  The strengths you thought were there actually weren't. You spend a long time hoping that person improves, and business gets worse as you spend your time working through things with your partner, neglecting growing the business.
• Second example:  One partner, while he owns half the business, doesn't really do anything for it.  The active owner ends up doing all the work, and feeling royally ripped off, so she starts thinking about buying out the inactive partner. Having this in mind, the working partner stops actively trying to grow the business, because if it grows too much, it will cost her more to buy her partner out.  Again the business suffers a near-death experience, if it doesn't crater altogether.
• Third example:  A large professional partnership has high performers and low performers, but the partnership structure means all get paid the same.  The low performers get overpaid for their contribution, and the high performers get underpaid. What's worse, the high performers lose interest and eventually find ways to leave the company.  What's left is a company of low performers.

To be fair, I have also witnessed several successful partnerships. But they were all formed by marriage.  These partners could go home at night, look at their kids, have a good chat, shut the bedroom door, and pretty soon all the business problems would be in perspective. They already knew that being in a business partnership meant being dependent on one another…but that was only a small part of their total commitment to the other person. So when you're choosing a partner, ask yourself, do I really want to be dependent on this person for the long haul, because face it, it's a lot like a marriage – without the sex. And if the answer is no, get your investment from a bank, and get the help you need from hiring an employee. That way, you'll stay in control of things, and your business will thank you for it. (And come on, how good is any marriage likely to be without the sex?)