It's a brutal world out there. Sometimes it doesn't hurt to have a friend. After all, where would Bud Abbott have been without Lou Costello? Sonny without Cher? Peanut butter without jelly? You get the point. It helps to have a partner, and at no other time is that more true than when starting a business.
But having a partner can also be disastrous. Abbott and Costello, the famous comedy duo from the 1940s and '50s, ultimately split up their act after years of jealousy and bickering. Sonny and Cher divorced, and peanut butter made alliances with chocolate. More seriously, look at the disastrous mergers of Time Warner and AOL, and Daimler and Chrysler. There's a reason that, according to BizStats.com, more than 72 percent of small businesses are sole proprietorships while only 6 percent are partnerships. Corporate history is riddled with the corpses of failed partnerships, famous and obscure. But it doesn't have to be that way. If you do your homework and truly find the answers to these seven crucial questions, you and your partner can be the next Ben and Jerry.
1. Who will be in charge? Sure, you want to say "we both are," but more often than not, there really is only one person who is the final arbitrator on the decisions. It may be whoever thought of the business idea or it may be whoever is considered the most experienced, but it's almost always whoever has the most money tied up in the company. Make no mistake, there will be a leader, says Gary Bradt, author of The Ring in the Rubble: Dig Through Change and Find Your Next Golden Opportunity and a consultant specializing in leadership and change whose clients have included eBay, FedEx and NASA.
After you decide who is in charge, draw up a partnership agreement. You can find an example at entrepreneur.com/formnet/legalforms.html. Lay out any concerns, like how the company is divided up, what happens if the partners split up and how much each partner is investing in the business. Have an attorney review the agreement.
"The worst thing you can decide to do is co-lead, without either party having clear authority and/or final responsibility in any particular area," explains Bradt. "That's just a recipe for disaster. Remember, if you have two leaders, you have no leaders. Confusion, power struggles, tension and dissension are sure to follow, not to mention poor business operations. "
2. What is your potential partner's work ethic? Ken Wisnefski, 36, didn't know Sean O'Donnell, 30, all that well before they became partners. They weren't chums in kindergarten, and they hadn't been college roommates. But they had worked at the same office, and Wisnefski was impressed with how hard O'Donnell worked and how smart he was.
Wisnefski ran his Mount Laurel, New Jersey, business, VendorSeek.com, out of his basement when he started it in 2002, and he knew he needed a partner who could shoulder some of the financial burden and was a master at salesmanship. "I had [closer] friends who were interested in my company and probably would have taken on a partnership," says Wisnefski. "I didn't view them as bad workers, but I thought they might not be as open to working all day on a Saturday, which sometimes you have to do. I thought [O'Donnell] would be accepting of that. "
More than five years after forming their partnership, the duo's long hours have paid off. VendorSeek.com has 35 employees, brought in more than $3 million in sales last year and was a finalist in Philadelphia Business Journal's "Best Places to Work " list.
3. Is your partner a good communicator? Not just with customers, although that's important. But can your partner talk honestly and openly with you? Joe Takash, author of the upcoming book Results Through Relationships and a business consultant for companies such as American Express and GM, suggests doing some serious talking before signing on any dotted lines. "Partners must be willing to drill deep on topics that can be awkward and uncomfortable and tackle them head on," says Takash. "This can create a strong sense of trust right upfront."
Without that trust, organizations and individuals can often implode, notes Takash, because Partner A is afraid to tell Partner B what he or she honestly thinks. "Most partners, particularly free-thinking entrepreneurs, are never taught how to manage conflict," he explains, "and this can become a deal-breaker of a stumbling block. "
4. Do you know what your partner's reputation was before you met? "Learn what prior businesses he or she has been involved in, either as an employee or a principal, and whether or not the businesses were successful, " suggests John Mariotti, president of The Enterprise Group and author of eight business books, including Making Partnerships Work. "Success usually breeds more success and vice versa. A track record of either failures or questionable outcomes certainly raises a yellow flag of caution. "
If you have no idea what his or her reputation was before you met, Mariotti suggests that you ask people who have worked with your potential partner in the past.
5. Do you have chemistry? Mariotti says working chemistry may be the factor that's most often ignored. "Try imagining what it would be like working day in and day out with this partner," he adds. "If you feel good about it and none of the yellow flags have popped up, [the chemistry] is probably good."
Eden Jarrin definitely felt a good working chemistry when she met her future business partner, Heidi Baker. They had only known each other a short time before Jarrin asked Baker to team up with her in a business endeavor. They met at a party where Baker mentioned how she and Hollywood sitcom writer Phil Breman were working on a show involving home improvement conundrums. It was based on Baker's own experiences dealing with home projects, and they were going to call it Jane of All Trades.
Jarrin, 31, who had previously been involved in a startup and had the entrepreneurial urge ever since she left, suddenly saw the sitcom not only as a show, but also as a business model. She envisioned what would become BeJane.com, a website designed to empower women in home improvement projects and other home-related issues. Jarrin asked Baker if they could meet over lunch to talk about it. Two weeks later, they did, and by the end of the meal, Jarrin was asking her newfound friend to start a business with her.
Jarrin went home to her husband, who was a bit apprehensive: "You know nothing about these people."
Meanwhile, Baker, 38, was concerned as well. "Worry was my middle name," she says. "I had never worked to create something like this before. My previous career was as a dental hygienist. "
Even though Jarrin and Baker knew little about each other and it took a while to get their mojo going, their business chemistry has been electrifying. In the first year after launching in 2004, BeJane.com brought in sales of about $150,000. Today, sales are in the millions, and the Burbank, California-based company has 10 employees. (Breman remains a mostly silent partner.)
6. What's your business partner's family like? Before you get married, people may warn you that you don't just marry one person--you marry that person's family, too. The same can be true in a business partnership. Beware of a partner with a demanding spouse who interferes in the business.
In 2004, Leanne Bucaro, now 42, invited a former colleague, Alan McLaren, now 48, to join forces at a PR firm in Oakville, Ontario. Even though new clients always ask if they're married, Bucaro and McLaren are happily platonic. And more important, their spouses are fine with them working together.
"I spend more time with Alan than I do with my family," says Bucaro, who thinks of her business partner like an older brother. Given that the two work and travel together, Bucaro says she's grateful that "there is complete trust with our families and no concerns that anything untoward is happening."
If either of McLaren or Bucaro's spouses were unable to handle their partnership, it's easy to imagine that Infinity Communications Inc. would not be where it is today: 12 employees and annual sales of $1.5 million.
7. What does your business partner want for the future? This one question should be asked in many different ways, Bradt says. "What is their risk tolerance level? What do they want to get out of the business? Where do they see the business one year from now, five years from now, 10 years or 20 years from now? Are they looking to grow and sell out their share of the business after so many years, or are they in it for the long haul? Are they building something for their children to inherit, and do they plan to bring offspring or other relatives into the business, either now or down the road? "
Although these questions might seem endless, Bradt warns, "Prepare now, or pay later. Spend time hashing through agreements on these issues now, or spend time and money later on lawyers--and maybe even shrinks."Geoff Williams has been contributing to Entrepreneur magazine for 10 years. He is also the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America.
Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.