How to Forge a Successful Partnership

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Finding the right partner, whether creative, life or business, can be a difficult endeavour.   Very few of the people that we interact with on a regular basis, no matter how much we like them, are actually suitable partnership material.  Anyone who has been in a relationship can attest to this.    It can be difficult to escape the inevitable irritation that comes with knowing someone too well.  Potential partners, who seem perfectly compatible at the beginning, end up being too much like us or too different (or occasionally psychotic).   For a partnership to work, it is vital to sustain an attitude of mutual respect , trustand compromise.  It also helps to not spend every waking moment together .  Both parties must recognize the value of each other’s skills and abilities and be willing to entertain their ideas, no matter how stupid they seem.  Additionally, an ideal partner should be compatible, but also different enough that they complement your skills and bring an alternative perspective to the table.   Conflict is often the spark that helps drive innovative thinking.  But conflict, as we know, can also result in irreconcilable differences.  As such, a good partnership should have its own built in conflict resolution.  As with any relationship it helps to have a good sense of humour as it can be invaluable in diffusing a tense situation.

Michael Eisner on managing partnerships:

Michael Eisner writes in his book “Working Together: Why Great Partnerships Succeed” Mr Eisner argues that there are some general principles that increase the chances of success. Partners need to be able to trust each other absolutely. Mr Eisner notes that many successful partners split the profits down the middle regardless of their contribution to particular projects. Partners also need to possess a delicate balance between similarities and differences. A striking number of successful partners combine similar backgrounds with very different attitudes to fame. Messrs Buffett and Munger are Midwesterners who grew up a few miles from each other. But Mr Buffett adores the limelight whereas Mr Munger prefers the shadows.

Should you have a Partnership Prenup?

YES.  Even (especially) if you are going into partnership with your best friend or a spouse it is essential to document each partner’s roles, responsibilities, profit sharing arrangements and details regarding dissolution of the partnership.  It is possible that you will never need to refer to the document and your partnership will be wildly successful. However, since the majority of partnerships fail, it is important to document the terms and expectations of the partnership.  While this not guarantee that there will not be any ugliness or legal action, it can at least mitigate the possibility of misunderstandings.   This article on “Partnership Prenups” , written specially for accounting firms but widely applicable, presents the following recommendations:

  • Address the issues and responsibilities that relate to claims that relate to work done by the leaving partners
  • Have an arbitration or dispute resolution mechanism to avoid long legal battles
  • Each partner should seek their own legal advice

Famous Business Partnerships:

Given that relationships evolve, people change and ambitions grow or wane, it can be difficult to know in advance whether a partnership will succeed or fail.   Google’s founders, Larry Page and Sergey Brin still share an office, while Facebook founder Eduardo Saverin instituted legal proceedings against  Mark Zuckerberg.   Steve Wozniak left Apple and Steve Jobs, shortly after it went public when his plane crashed.  Although he returned, it was in a less senior role.  Wilbur and Orville Wright never married as they were too involved with their business. William Proctor and James Gamble met as a result of being married to sisters and remained partners until their respective deaths.   Finally Mick Jagger and Keith Richards have managed to stay together despite Richards copious drug taking and references to Jagger’s “tiny todger”; Three things helped them to succeed where so many other bands have split: their “under-rooted friendship”, as Mr Richards puts it, forged in London in the 1960s; their recognition that they were much better together than apart (who remembers any of their solo work?); and their mutual love of money.

Ronika Khanna is an accounting and finance professional helping small businesses achieve their financial goals.  Please sign up to receive articles pertaining to small business, accounting, tax and other topics of interest to business owners.  You can also follow her on Facebook or Twitter.