The Beatles broke up way too soon. John Lennon and Paul McCartney were one of the most prolific and successful songwriting teams in history–just imagine the music they could have produced if their partnership had lasted longer. The Rolling Stones purportedly have fought like cats and dogs over the years but are still together. What has made the difference?
I have a friend who says that the only ship that’s guaranteed to sink from the day it’s launched is a partnership. I’m sure he said this at least somewhat tongue-in-cheek, because we all know partnerships that have endured the test of time.
So what makes a partnership last versus becoming a sinking ship? Without going through the entire strategic planning checklist, below are some important questions to answer before (or even after) launching a partnership.
As I’ve said many times in many parts of this great nation–ambiguity is the enemy. High performance requires teamwork, teamwork is based on trust, and trust is based on doing what you say you’ll do.
That’s why it’s so important for the potential partners to say what they’ll do in the beginning to see if they have values and priorities alignment. If you don’t, then you can save yourself a lot of time and money by not going forward, because these values and priorities are what will drive your future decisions. Without this alignment, future conflict and frustration are guaranteed right out of the gate.
It’s best to answer these questions before you have a disagreement. If you wait until there is a conflict and people are annoyed with you about something, they’re much harder to negotiate with. Also, the more successful the company is, and the more money there is to fight over, the more likely there will be a fight.
- Are you selling something people want to buy; i.e., do you have a viable business model?
- How will you generate revenue? This may sound ultra-basic, but I’ve seen many businesses lose sight of the fact that, without revenue, nothing else really matters.
- What is your vision for the partnership? For example, are you building a company to sell in five years, or are you building a company your children can work in (BTW, this is another whole discussion)?
- Does everyone feel compensated fairly for their contribution to the success of the company? People are always telling me that the world isn’t fair, which is total malarkey. The world isn’t anything, it’s just the world. Some people are fair and some aren’t; don’t partner with those who aren’t.
- How will you calculate contribution to the success of the company and subsequent compensation? For example, if people are in a sales role bringing in revenue, do they deserve more of the money than people who are in a manufacturing/service delivery role?
- How and when will you divide the revenue and profits?
- How can partners leave when they want to without a huge hassle?
- How will you fire a partner for non-performance?
- How will you handle a partner who becomes disabled and can’t work anymore?
- How will you handle a partner who dies? For example, do you really want to be in business with his/her spouse?
- Speaking of which, what is your policy on hiring family and friends into the company? Are they held to the same standards of performance as everyone else?
- How will you dissolve the partnership if the company fails?
- Choose partners whose values and priorities align with yours, people you’re proud to be in business with.
- Ambiguity is the enemy and will inevitably create conflict if left unaddressed; get clear on goals, roles, compensation, etc. before you launch the partnership.
- Once you launch your partnership, spend enough time on proactive communication and teamwork to keep ambiguity at bay and maximize your financial success.