Partnerships are like aircraft. The only ones you hear about are the ones that crash.
A partnership can be a great way of growing a business and selling it, putting it under management, or transitioning it to a partner. Here is what makes a partnership work.
Many business owners freak out at the thought of a partnership. “Partnerships don’t work,” they tell me.
My own partnership, some years ago, says otherwise. It was highly successful, it drove serious growth, and that growth is exactly what you want when you are preparing a business for sale. It also taught me what actually holds a partnership together.
1. Start With A Common Goal And An Exit Strategy
The single biggest factor in our success was a common goal from day one. Ours was to exit with equity in three years. That one shared objective pushed us to grow the combined business to roughly ten times the value of our individual businesses.
So here is the golden rule.
Set the end game while the partnership is new and everything in the garden is rosy. It is far easier to execute later, especially if circumstances change or things don’t go to plan. Ours was written straight into the business plan.
2. Embrace Differences And Build On Complementary Skills
Opposites attract. A partnership works best if the partners bring complementary skills to the table.
My partner Peter knew he didn’t have the skills or the appetite for logistics and day-to-day operations. Those were my strengths, along with delivering the workshops. Peter’s strength was developing the business and driving sales. We each worked to what we were good at, and the business grew because of it.
Partnerships struggle when people partner with someone exactly like themselves.
3. Shared Values
Underneath everything sits one thing: compatible values. Relationships run on trust and mutual respect, and both are built on values.
Years ago I sat in a room of 60 or 70 people working through an exercise on defining their values. The last task was to find others in the room whose values matched yours. Out of all those people, Peter and I found each other.
4. Cultivate Equality, Trust And Respect
Another golden rule. Do everything 50/50 wherever you can. The moment one partner holds 51% and the other 49%, you have created a hierarchy. Partnerships are meant to be equal, and equality is what keeps the peace.
Set out distinct roles and responsibilities early. Treat it like recruiting: look at the person’s background, their wins, their failures, and work out where they are strong. You want one partner’s strengths sitting over the other’s weaknesses.
Recruiters talk about eligibility and suitability. It applies here just as well.
- Eligibility — do they have the skills and experience, and do those skills complement yours?
- Suitability — will you actually get on, do you share values, and can you build trust and respect?
5. Communication And Knowing How Each Other Works
Peter knew I am a muller. I need time to mull things over before I make a decision.
So when he wanted to sell a workshop we didn’t yet run, he softened me up with breakfast, put it to me, then said he didn’t want an answer now — take 24 hours. My first reaction was “no, we don’t do that.” A day later I had a solution. He knew I would. He just presented it in the way that suited how I think.
We also agreed upfront to alternate who made the final call when we disagreed. It worked. We had our moments, but we always talked them through, laughed them off and moved on.
6. Sort The Legals Out Upfront
Get legal advice and have a partnership agreement drawn up. Peter and I never had a formal written one — we agreed the rules of the game between us. Having since watched plenty of client partnerships, I now tell everyone to get the agreement done properly.
That agreement is not just for when things go wrong. It covers a partner falling ill or passing away, and it protects the one left standing. And note the order of events: you write the plan, the lawyer legalises it. Not the other way round.
For family businesses, the same rules apply, but there is an obvious danger of running too high on emotion. Heart and mind work together, but the decisions get made on cold hard facts and numbers. Try to keep business and family life as separate as possible. Otherwise, emotions can boil over and you end up with a family feud and an unsaleable business.
7. The Short Version
- Get clear on the purpose and the common goal
- Build a business plan with the exit strategy in it
- Build mutual trust and respect
- Use your differences — skills and personality
- Define the roles clearly
- Keep it 50/50 and keep it equal
Taking a partner into your business can set it up for a successful sale. Your partner may even end up buying you out. That is another option on the table, and options are the whole point.
My business partner Peter and I had a chat about what made our partnership work, and we made it into a podcast.
Thinking about bringing a partner in, or already in a partnership that needs sorting out? An external facilitator working with both partners makes an enormous difference. Email me and let’s talk it through.
