How a Partnership Can Make Your Business Go Down in Flames
Episode 721: Show Notes
We’ve been asked countless times about our business partnership and our take on whether we feel that partnership is a good route. We’ve been in a partnership from the get-go, and clients are often curious as to how we manage communication and generally maintain a healthy working relationship. In this episode, we tackle the cons of partnership: why you should never get into one and why, and the next episode will explore the pros. Naturally, there are potential issues that can arise and cause tension in a partnership, and today we identify what to look out for if you’re considering partnering up with someone. You’ll discover a few of the, dare we say, many drawbacks of partnership, the requirements for maintaining a successful partnership, and the principal cause of partnerships (and subsequently, businesses) going down in flames!
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Reasons You Should Never Get Into a Partnership
We’ll start with the most obvious drawback: splitting profits. In order for you to earn as much as other businesses of similar sizes, your business has to be twice as big. We’ve been splitting profits from the get-go and we can tell you from experience that it makes it harder to save! There’s a certain amount we have to make to simply afford to run our business.
Another reason is the pace at which you’re able to make strides within your business. People assume that because there are two of you, you can get twice as much done. In some seasons, it’s true, but as the company (and the associated risk) grows, the longer it takes to launch ideas and pivot. Typically, entrepreneurs like to be swift decision-makers but it doesn’t always work that way in a partnership.
A third thing to consider before entering a partnership: all liabilities are shared. Every risk (and reward) is shared. Thus, your financial values need to be in alignment. We’ve found that our personal and financial relationship is more complicated than our marriages and would be so much harder to untangle!
Requirements for Maintaining a Healthy Partnership
There is the absolute requirement of getting buy-in on your ideas and the ways in which you want to grow your business. Your lifestyle values need to be in alignment in terms of how much you want to work, the energy you want to bring to work, and how much you want the business to grow. For a partnership to work, you need to feel charged with the same convictions and share all of your ideas early on.
Next up is communication. You need to communicate your personal needs to your partner and identify boundaries! Self-awareness about your triggers and motivators is essential. Because you own the company, it’s in your best interest to be transparent with your partner about life events and your relationship with money.
The Financial Burden of Partnership
Just as splitting profits is a drawback, so is the fact that all costs are literally doubled. For example, traveling for work or going to events costs double because there are two of us. When we’re asked to speak, our speaker rate is high for that very reason, which leads to fewer opportunities, as it’s not really worth it for us financially. Similarly, we are often charged twice as much for educational workshops and courses, despite attending on behalf of just one business.
What Will Cause Your Business to Go Down in Flames
Thankfully, this hasn’t come up for us but we’ve watched it tear other business relationships apart and is potentially catastrophic for all of us. We are referring, of course, to disagreements. Disagreements can cause the business to go down in flames. That’s not to say you can’t disagree, but if it escalates into a fight, you’re toast! We’ve always been fortunate enough to come to a mutual conclusion.
The greatest cause of disagreement in a partnership is generally resentment as a result of a mismatch in duties. If one partner feels they’re working harder than the other, it can easily lead to resentment, which is why it’s so important to speak up when you need help and to continually revisit how you’re dividing and conquering. You need to be in agreement as to whether you’re in a growth phase or a maintenance phase, and what that means for each partner. How you’re dividing and conquering is critical to the long-term stabilization of a partnership. Another danger is passing the blame. If you’re not willing to take responsibility, your partnership is in trouble. Instead of passing the blame, work towards solutions.
Quote This
How you’re dividing and conquering is critical to the long-term stabilization of a partnership.
Highlights
Reasons You Should Never Get Into a Partnership [0:10:49]
Requirements for Maintaining a Healthy Partnership [0:19:09]
The Financial Burden of Partnership [0:27:16]
What Will Cause Your Business to Go Down in Flames [0:28:46]
Today’s Guest:
Abagail & Emylee
The Strategy Hour Podcast
The Strategy Hour Podcast is a twice weekly show hosted by Abagail Pumphrey and Emylee Williams, the founders of Boss Project. Join us for semi-ranty biz conversations for service providers looking to ethically grow their agency businesses. Episodes cover everything from lead generation to leadership mindset to team culture and beyond.
Key Topics:
Business partnership, Business structure, Partnership cons, Communication, Value alignment
