6 Challenges Confronting Every Business Partnership
Entrepreneur's New Year’s Guide
For every Danielle Weisberg and Carly Zakin-type union to come out of Silicon Valley, there’s been a handful of soured partnerships. It’s not hard to see why. Business partners spend an enormous amount of time together and make career-threatening decisions. They have to support each other through ups and downs and plenty of isolation (even through the trough of sorrow), and they make personal, financial and emotional sacrifices to do so.
While it’s often better to find a partner than to take up the stressful task of building a company alone, getting along with that partner isn’t always going to be a walk in the park. Before setting up Due.com with my business partner John Rampton we worked on many small projects together. I recommend starting slow and building up to a larger project.
Here are some of my observations of what entrepreneurs have to deal with from their most important working relationship.
1. Different management styles.
Different management styles don’t have to be a big problem. Some partnerships take on parental dynamic: one is a disciplinarian who is task-oriented, slightly distant and intent to get things done. The other is laissez-faire, relatable and prioritizes a ''chill'' company culture over a well-oiled machine. In the best case scenario, one lays down the law and keeps the ship on course, while the other keeps employees happy.
Unfortunately, sometimes this backfires: the taskmaster might be tired of having to manage her own business partner; the other might feel overwhelmed by having to be a boss. Or, both partners might be pure “idea people” unaccustomed to telling others what to do and unable to step up to the plate, or they might both be highly disciplined control-freaks. This is a difficult problem. It takes time and energy to establish a balance.
2. Personal habits.
In the early stages of a new company, the rules for maintaining a work-life balance don’t really apply for founding members. Those who have offices can expect to stay there well past traditional quitting time. A lot of people can’t take the pressure. There’s a huge range of different vices and vulnerabilities that can jeopardize a business partnership, especially if there are no other employees: substance abuse, alcohol, lapses in ethics, and mental health issues.
As everyone has their own coping mechanisms, there’s no clear way how handle these types of obstacles except on a case-by-case basis. It’s important that both partners keep an open mind, give each other time and space when necessary, learn to recognize triggering moments, and not interfere until asked or until it becomes necessary (including legal liabilities).
3. Financial problems and equity.
Another struggle many partnerships face is the nature of the partnership. After all, not every team is split 50/50. The founder might be willing to put up all the money and just needs tech or business help to get it off the ground. In this case, how is equity divided? How is the secondary partner valued? Are the guidelines absolutely clear to both parties involved? These questions should be addressed at the end of the courting period, but it’s eminently important that there are no lingering tensions going forward.
4. Setting boundaries.
If partners become best friends there’s a chance that every decision or disagreement could be taken personally. Best friends who become business partners can face unexpected situations that compromise their professional and personal relationship.
On the other hand, best friends who know each other really well might understand how to keep each other motivated and how to balance work and each others’ strengths and weaknesses while maintaining a unified vision.
5. Commitment levels.
Much like issues over equity and financial contribution, it’s necessary to be perfectly clear on what each partner is looking for. One might just be in it for the experience, but not willing to put in the time and dedication required. Maybe they want in but keep their day job, invest little money, or lack needed skills outside of their own specialization.
This will become harder to navigate as the startup experiences ups and downs. A partner who is excited in the first month might not be as excited by the seventh month.
6. Disparities in skills and roles.
Entrepreneurs understandably seek partners who are at least as experienced as themselves to jumpstart the business but that doesn’t always happen. After all, they’re asking someone to quit their day job, take a huge salary cut (if they’re lucky enough to get a salary!) and live on their savings to follow a vision that hasn’t been actualized yet. Few established professionals are willing to take these risks. Then it becomes a matter of finding anyone willing with the kind of qualifications you’re looking for.
Eventually, this means that while it’s a learning process for both parties, it’s more of a learning process for one person and no one wants to be, or work with, a co-founder who can’t keep up with the company.Look for a business partner with a demonstrated ability to work hard for long hours, and a keen willingness to learn new skills and experiment with ideas.
Building a relationship with a business partner requires just as much work as any marriage. By being aware of the challenges you will face, you can be prepared.