How to Manage Your Business Partner Disagreements and hurt feelings between co-founders can sink a company before it starts. Here are four strategies to set the relationship up for success.
By Alina Dizik •
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When Ari Mir, 31, and Amos Elliston, 38, met as coworkers at a Los Angeles startup, they instantly clicked and began bouncing around ideas to hatch a business of their own. Seven years later they launched Pocket Change, which seeks to build a universal rewards currency similar to American Express points but accumulated through apps on your phone.
Launched in 2012, the San Francisco-based company has already raised $5 million in venture capital. While Elliston and Mir enjoy each other's company, they say the partnership has been successful largely because they've set boundaries and maintained their own lives outside of work. This work-life divide limits their overreactions when it comes to business matters, says Mir. "We're not best friends," he says. "You need some sort of distance or you are always going to take things a little too personally."
Co-founder disagreements and misunderstandings can sink a company before it starts. Here are four ways to manage your partner and set the business up for success:
Get an outsider's perspective.
Most startups don't have a board of directors but still need an outsider's viewpoint. Frank Demmler, an adjunct professor of entrepreneurship at Carnegie Mellon University's Tepper School of Business, advises founders to give a monthly presentation about company goals and challenges in front of two or three mentors. Presenting to a third party keeps partners from blaming each other for company decisions gone wrong. For example, partners who disagree about how to price their product can present their cases to their mentors instead of getting into a direct conflict with one another. Getting into this habit also helps the founders gain perspective on their decisions, since their mentors are removed from the day-to-day ups and downs.
Related: Essential Elements of Working With a Business Partner
Solve problems before they happen.
Just like you would create a business plan, it's a good idea for founders to sit down together, write out potential hot-button issues and think through solutions in advance. For example, you'll want to outline each partner's time commitment to the company and how you'll handle personal problems, such as illness. It's also important to discuss how and when the partners will be paid and strategies for growing the business, says Demmler. For instance, one partner may want to keep the profits, while the other may prefer to re-invest them in order to scale. Taking the time to address what's important to you upfront can help prevent future breakdowns in communication, he says. "Do it at the beginning when rational minds are engaged."
Clearly outline job responsibilities.
If one or more founders isn't pulling their weight, it can breed resentment. One way to avoid this is by assessing and redistributing the amount of work each one does through weekly partner meetings, says Shahab Kaviani, chief executive at CoFoundersLab, an online co-founder matching service based in Rockville, Md. Knowing you will meet regularly to discuss the workload can help ease any lingering tension. Keep in mind that a balanced division of labor doesn't necessarily mean divvying up every project. For example, instead of splitting the marketing work down the middle, one partner can focus on marketing while the other concentrates on operations. Of course, you'll want to consider each other's strengths when making those choices.
Consider all partners when making decisions.
For many business partners, making even the smallest company decisions can turn into a drawn out, painful process, which can slow down the company's upward trajectory. Learning how to effectively negotiate with your co-founders will help smooth out potential gridlocks. When negotiating a big decision, Douglas Noll, a corporate mediator in Clovis, Calif., suggests that partners focus on their overarching goals, rather than quibble over specifics. For instance, if you'd like to take more money out of the business to pay off company debt, make a list of the long-term benefits of doing so, such as added financial security. When you come to the negotiating table, discuss ways that you might be able to achieve your ultimate goal of financial security, and offer directing funds to pay off debt as one possible method.
At the same time, Kaviani advises against making concessions without getting something in return. For example, when negotiating a hiring decision, one partner might agree to hire someone they're not sure about, if the other agrees to a three-month trial period for the employee. Then, both sides feel they have gained. Finally, he says it's important to stay calm during these discussions, because losing your cool can escalate the conflict rather than resolve it.
Related: How Not to Get Burned When a Partnership Goes Bad
