Why I Violated My Promise to Never Have a Business Partner
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I started my business in 1999 while I was a college student. At first it was just me, working as a freelance web designer. During that first year my design business started doing well, and I decided it was time to grow the operation and make it a real business. That meant bringing on partners, full-time employees and opening an office.
In retrospect, I think I should have focused on growing my freelance career and finishing school. But my entrepreneurial ambition was too strong and I fell prey to my ignorance and inexperience.
I set up an office, hired staff and brought in two partners whom I barely knew -- people I had never worked with before. But they seemed like nice, smart guys. And they were. (One become a real estate investor and serves in a leadership role in state government, while the other has started a private equity fund.) But it was a mistake for me to team up with them.
In 2003, two and a half years after I took on these partners, we sold the business. For me, it seemed like a chance to make a clean break, start over and do things my way.
Making a mistake in dissolving the partnership.
Once again, I made poor, hasty decisions and the deal we structured ended up with my giving up the business and losing money in the process. In effect, I paid someone to take over my profitable business. By the time it was all resolved, I was so frustrated with how the deal had worked out that I swore I would never have a partner again.
I stuck to my word for almost 10 years. I was moderately successful as an entrepreneur during the best of times, which were rare, and a rotten failure for the rest of the period. But I didn’t blame myself. I blamed the deal that went sour and the mistake I had made in choosing partners.
But I had flashes of insight through that period, and deep inside I knew that if after a decade, I wasn’t successful, it was no one’s fault but my own. I also knew that having a partner could help, but I pushed that thought to the back of my mind as much as possible.
Opening up to collaboration after a 10-year hiatus.
It wasn’t until early 2012 that I became fully open to the idea of having a partner again. I was blessed enough to have a good friend who frankly told me one day, “Josh, you’re not very good at sales. You need a partner who is better at it than you are.”
I knew he was right. If you were to look at my company’s financials, you would notice a distinct trend: The business would grow to about several hundreds of thousands in annual revenue and then flatten and slowly start to decline.
The problem was that once I reached a certain level of revenue, I would become comfortable. Then I would become distracted by pet projects and take my eye off growing my core business. Revenue would slide until I became uncomfortable financially. Then I would then make an effort to go out and close new deals and revenue would jump again.
In bringing on a partner, I wanted to find someone who would do the following: find the deals I was too busy to pursue, close deals better than I could, keep me focused on the core business and help me make better business decisions.
I immediately began to search for a partner who could help me build the business. But by the end of 2012, I had become frustrated in my search. I didn’t want to bring on someone I didn’t know. I had made that mistake years before. But I couldn’t think of anyone I knew whom I hadn’t already considered and found to be not the right fit.
It was then the wheels were put in motion for me to violate a second of my cardinal rules of business -- to never hire a family member.
Finding the right partner.
Over the holidays I started talking to my brother-in-law about my business. He had a few years of experience in sales, and he started giving me tips about how to improve my company's efforts in that regard. As we talked, I thought he had some good ideas, so I asked him to do some part-time consulting for me. We proceeded for a few months on this basis, and by the middle of last year I knew he was the partner I had been searching for.
A year ago we agreed he would become my partner in the business, and work began in earnest to grow what was now our agency. Since then the partnership has worked out fantastically well. My brother-in-law has succeeded in landing deals that I never would have secured. He has kept me focused on the business and helped me make better decisions.
As a result, our monthly revenue has grown more than a thousandfold over the last 12 months. I have experienced more success than I have since 1999. We figured out how to scale the company for growth, and we’re on track to grow it into a large enterprise within the next five years.
Multiple factors came together to create this success, but I can say with absolute certainty it would not have happened had I stuck to my promise to never bring on a partner.
Here are four tips for navigating this new terrain:
1. Don't rush the search for a partner. If your business can't survive a few months without your having a partner, perhaps your business has more serious problems.
2. Date before getting married. You're turning over a major part of your life to your new partner. Be sure you know the person, that this businessperson knows you and that you work well together. Ideally, work together first without the promise of partnership on the table so that you can go a different route if teaming up doesn't make sense.
3. Start with smaller commitments, then move to larger ones. You may be a generous person who wants to lavishly reward your new partner for coming on board. The problem is it's easier to give someone more of something than take away what you've already promised. So start with small steps, then incorporate larger ones, based on time and performance.
4. Hire a lawyer. It might cost a bit of money and possibly take funds you don't have, but it's better to spend a few thousand now to get things right, rather than losing your entire business -- and your sanity -- later.