To Partner or Not to Partner, That is the Question

Considering a partnership? Think long and hard. Here's what to consider.

I've had four business partnerships. Three of them dissolved, and one is still going strong.

For the last few months, I've considered whether I wanted to try again (the fifth time's a charm!) with an upcoming venture. The answer was an emphatic "yes" because of the person I'll be partnering with. They could not be a more known quantity, exceptional individual, or trusted comrade.

But my reflection got me thinking about the three that didn't work and the one that has worked remarkably well. It also gave me a framework for evaluating the upcoming partnership.

Let's dive in.

Why Partner?

The first thing to consider is whether a partnership makes sense for you. My perspective is that if a partnership is not needed or required, go it alone.

Alas, there are many good reasons to partner. Here are a few:

You Each Bring Something Unique to the Table

A great reason to partner is that the other partner has experience, skills, abilities, and/or relationships you don't have, and vice versa. If you have an audacious idea but know you're missing a piece that can't be hired, outsourced, or otherwise secured, then a partnership is the way to go.

Speed to Profit

A partnership may allow your business to achieve profitability more quickly and/or in greater quantities. Perhaps going at it alone will take too long, and you'll run out of cash (or patience, or energy!) before reaching "the promised land."

Remember, though, that if you're partnering with one individual, you'll want a reasonable expectation that the partnership will more than double your speed. And the more partners you're taking on, the higher the multiple you'll need for this to "make sense."

Profit Potential

A corollary to the speed factor is the cumulative profit factor. A great partnership will generate 2-10 times more net profit for the shareholders than a solo attempt. If you can't see this in your modeling of the new venture, I'd pause long and hard before launching the partnership.

Must Haves Before Partnering

OK, so you check one or more of the "Why partner" boxes and think a partnership is in your shared best interests. Here's what you'll have in place before moving forward:

Confirm YOU are "Partnerable"

Some people simply can't be good business partners. You need to know this about yourself. "But, if I've never tried, how do I know?" Well, consider your non-business partnerships (friendships, marriage, times you've worked on a small team, even your school days!) Did you "play well with others?" Were you able to take responsibility when things didn't go well? Are you willing to live with the mistakes of others? If you answer "no" or "not really" to any of these, you may not be partner material.

Aligned on 10-3-1

Borrowing from EOS (Traction) philosophy, you and your partner(s) should be aligned on your 10-year vision, 3-year picture, and 1-year plan for the business. Take some time and work through these one by one. If there is misalignment, your partnership will fail at best or keep you trapped with each other at worst. Avoid at all costs.

Ethical Match

You want to ensure your partner has a track record of similar ethics. If you don't know your partners well enough to know this, you each should do a little background checking on each other. If you don't know each other well enough to know who to check with, I suggest punting on the partnership. You are, in essence, business strangers.

Business Must Be Able to Support All Partner Families

This is a big one, and I've seen it tear partnerships apart a few times before: the business, at its full manifestation, can't support both partners in the way they need it to. If the business simply can't generate the needed returns, both partners will feel regret and look for ways to either exit the partnership or generate additional revenue outside the partnership. Neither works well.

Equal Risk on the Table

Both partners need to share in the risk. If one partner is leaving an incredible job and the other is in a dead-end situation and "has nothing to lose," this is a petri dish for discontent. The partner risking more will certainly feel unfairly compensated. (Note, this MIGHT be offset via an unequal ownership share, but that's a whole other can of worms.)

Equal Work Ethic

This one is huge and probably the most complained-about issue I hear when talking with a partner about their partnership: the perceived (or actual) disparity in work ethic. One partner is giving it their all, day and night, not letting a single thing fall through the cracks, and the other is taking mental-health days in week two and always, ALWAYS, has an excuse why they can't meet an obligation. I suggest detailed, extensive job descriptions be created, agreed upon, signed, and tied to compensation from Day 1. That's right, while you may have equal ownership, you certainly don't need equal payroll.

Conclusion

At the end of the day, you and your business partner become an adopted family. You inherit each other's strengths and weaknesses, skeletons, and superpowers. It's a serious decision that may impact you more than any other relationship in the coming years.

So, proceed with caution. And only after significant thought!

Thanks for reading this post. I appreciate you. In return, please share this with those you know who may be interested.

Books of Note: I love a good business biography. And when the author also weaves in significant actionable takeaways, well, you’re speaking my love language. I was late to the party on Will Guidara’s 2022 bestseller Unreasonable Hospitality, but I’m so glad it was recommended to me. So here you go: I’m doing the same for you!