How to be Smarter When Choosing Your Business Partner
In the ‘80s, I was a CPA and exceedingly unhappy working in one of the “Big 8” accounting firms in Las Vegas. I needed a change.
A woman I knew asked me to go to lunch with her. Over lunch, we talked business, of course. Eventually, she got to her reason for our lunch: Would I be interested in partnering with her in an accounting practice? Now, I was unprepared for that. I knew I wanted out of my current position but hadn’t considered self-employment. Nevertheless, I jumped at it, thinking, “What could be wrong with this?”
About nine months later, we were in an office with our respective attorneys working out the dissolution of our partnership and, with it, our friendship.
Just Because it Sounds Like a Good Idea…
…doesn’t mean it is one.
When I agreed to the partnership, I didn’t know what that meant. I learned how to do accounting at UNLV, not how to run a business. So I wasn’t prepared for what it would take.
And the first step, of course, is knowing who you’re going into partnership with.
I didn’t know my new partner well. We were acquaintances in another organization. We both just happened to be CPAs. I didn’t know her work style, values, or strengths. I hadn’t asked questions about finances. We didn’t talk logistics, office management, or employees. I didn’t know anything about doing due diligence. I didn’t know what I didn’t know.
Had I known her better would it have made a difference? Absolutely.
Do your homework if you don’t want to find yourself locked out of your office after returning from a week in London.
A partnership is just like a marriage. And all of this is true whether you’re planning to go into business with a friend, family member, or life partner.
- Make sure you understand each other and have the personalities to work together. (We use a DiSC Behavioral Assessment with partners and in teams to identify strengths in each.) Use whatever tools and resources you have available to you and don’t skip this step. Even if you’ve been friends for years, working together changes things.
- Iron out the business agreements in the beginning. This is a hard one to understand for many people, after all, you’re great friends, right? What could go wrong? Trust me – the best time to plan for the worst is when you least expect it. Use a professional to draft your agreements. Don’t count on yourself to be able to write anything solid and binding.
- Set up regular business meetings to check in with each other to take the pulse of the business and where you both are.
- If using DiSC, your communication styles will be identified early on so no matter how well you know each other, your communication with each other will be more solid.
- Make sure you’re both on the same page about what you want for your new business: What are the business’s values? What are you creating? What are the financial goals? Why are you in business together? How will you hold each other accountable? How will decisions be made?
Use My Lessons to be Smarter
Having a partner is a blessing and strength when it’s the right one. I’ve been in partnership now for over 30 years with my life partner, and while we’ve been through challenges, both partnerships are better than ever.
When it works, it can make all the difference to business success. Your friend might be the best partner you could have. Ask the questions, do the assessment, talk about your values and goals, then make a decision based on the facts.
Don’t jump in blindly to escape a bad situation as I did. You’re likely to find yourself in a worse one.
Making big decisions like starting a business needs to be made with your eyes open. Find a trusted friend or professional to share your ideas with and to ask you the hard questions before you invest too much time and energy into a venture that’s not been thoroughly reviewed. This is a great place to use your mastermind group. Their input could be invaluable to you.
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