ASLU 017: Tips For A Successful Business Partnership When You're a Creative
Melissa with her Food Bloggers of Canada business partner, Ethan Adeland
Most of us creatives, artists and makers tend work away in relative solitude from our studios and home offices. A lot of us like it that way and are perfectly content running our businesses solo with maybe a little help from some contractors or a part-time employee. But have you ever wondered what it would be like to have a business partner?
Starting a new business with partner, or bringing a partner on into your existing business is a big step and we’ll be real here - it’s not for everyone! But having a business partner can also be incredibly fun, rewarding and take your business to heights you might not have anticipated.
In this week’s episode we’re diving into business partnerships - the pros, the cons and the questions you need to ask yourself if you want to set yourself up for success. Lisa takes on the interviewing chores here and asks Melissa what she’s learned from her 9+ years in a successful business partnership and how it compares to her also owning a sole proprietorship.
The biggest themes that come through in this episode are oh so very similar to the keys to having a successful long term romantic partnership: the importance of communication, the ability to let things go, the importance of embracing your differences and turning those into advantages and why it’s so important to find a partner whose values are in sync with your own.
Listen To the Episode
Here’s a direct link to Episode 17 - or you can listen via the players below:
A business partnership is very much like a marriage - with kids. When you enter into a partnership the two (or 3 or 4) of you become legally tied to each other. And you have this child (your business) that you are responsible for raising. It’s up to you to help it grow, keep it healthy and make sure it’s a good corporate citizen.
And just like a marriage, sometimes you dive in head first because in your gut you know this is the person you’re meant to do this with but ideally as much as you know in your gut this is the right person, you also know with your brain that this person is going to be a good partner.
Like a marriage, there will be good times, bad times, difficult times and times where you have no idea what you’re doing. You’ll fight, you’ll laugh, you’ll both screw up and you’ll support each other. And just like parenting, there will be times where you’ll look at this business and be so proud of it and there will be times where you’ll wonder if you’re doing the right things to help it grow and be successful. Sometimes it will be so much fun, and sometimes it will be such a slog that you’ll wonder why you’re doing it at all.
So how do you know in your head that the two of you might be good business partners?
Do You Have Similar Values?
One of the keys to a successful partnership is that it’s important that you and your partner have a similar value system. You don’t want to form a partnership with somebody who will do something, or ask you to do something, that makes you uncomfortable from a moral, ethical or even potentially a legal standpoint.
You don’t have to see eye to eye on every little detail but you do want to have as little variance as you can so that disagreements about how you move forward on a particular situation, are manageable with a little bit of communication and compromise.
Do You Have A Similar Attitude Towards Money?
Is one of you a saver? Is one of you a spender?
How do you want to build your business? Are you both ok with taking on debt? Or will you bootstrap? How will you decide if something is a good financial risk or a bad financial risk?
How will you decide on how much you can each spend without getting permission from the others? Can you buy a client a cup of coffee without asking anyone? What about buying a $300 ticket to a conference? How about spending $1500 on a new computer?
All businesses have good times and bad times. How will you handle a year of healthy profits vs heavy losses?
If you’re too far apart on any of these questions be prepared for a lot of disagreements!
What is Your Level Of Risk Tolerance?
One of the pros of having a partner or partners is that ideally, you’ll all push each other out of your comfort zones… gently! That’s healthy. But if you’re very far apart on your ability to tolerate risk, it can cause a lot of unrest in your business. One person will always feel stifled and the other will always feel like they’re standing on the edge of a cliff being forced off. That can be very stressful for everyone involved.
Just opening a business comes with a fair amount of risk so hopefully both of you are ok with a small degree of risk. Ideally you’ll both want to be people who like to take calculated risks. This is where you take risks but first, you assess the situation and consider all the possible outcomes before deciding if the risk is worth the potential reward.
Are You A Control Freak?
Let’s have a candid conversation here. Having a business partner is not for everyone. A lot of us start our own businesses because we want to be in charge. We want to call the shots and have control over our futures. This doesn’t always set us up for success with a business partner. Partnerships are about collaboration and compromise. If these are things that you or the person you’re considering as your business partner struggle with, a partnership may not be right for you.
Do You All Bring Different Strengths to the Partnership?
Ideally (but not always), you’ll want to team up with somebody who has different strengths and weaknesses than you do. This is especially helpful in the early stages where you might not have the money to hire somebody to do the things you’re not very good at. Maybe you’re a marketing whiz while your partner knows their way around a profit and loss statement. Maybe you’re the idea person but they’re good at follow through and execution. Hopefully you all bring different things to the table that your business can benefit from.
Now let’s tackle the pros and cons of having a business partner, which are often interchangeable!
The Cons of Entering Into a Partnership
You never get to make a decision on your own. You’re always have to run things by eath other – especially big things but often the little things too - especially in the beginning.
If you’re a quick starter who gest ideas and like to execute them quickly (like within hours of your idea), you won’t be able to do that in a partnership, especially if your partner is the type who needs to think things over.
It’s a constant state of compromise with almost every decision – even if it’s very small and even if you mostly agree. You won’t always get your own way.
A partnership is not about you. A partnership is about the 2 (or 3 or 4) of you and it should reflect all of you and your personalities. It should incorporate all your strengths and minimize your weaknesses.
The Pros of Entering Into A Partnership
If you feel like you’re experiencing a little déjà vu here you’re not! Some of these are the same as the cons!
You never make a decision alone! Yes this was also a con but, when you work on your own you have to make all the decisions by yourself. The constant decision making when you own a business and the fear that you might make the wrong decision can become paralyzing and instead of moving forward, you can find yourself stuck in one place out of fear. But with a partner, you’re in it together. You make the decisions together and there’s a lot of comfort in that.
If you screw up, you screw up together. Somebody always has your back and you pick each other up when things go wrong.
There somebody to celebrate and share the successes with. When you work for yourself and something goes well and you look around the room and there’s nobody to high five, it’s kind of a bummer. But with a partner there’s somebody to celebrate with and that can be very fulfilling.
There’s also always a little bit of tension – in a good way. The trick is you want it to be a gentle, positive tension. Ideally you want to push each other out of your comfort zones. For example, if you don’t like networking but your partner does, they can coax you out to more events when otherwise you might have stayed home.
Dealing With the Money
Just like in a marriage, money can be one of the biggest challenges in a partnership. How you deal with money will depend first and foremost on how your partnership is set up. Are you equal shareholders or does one of you own a larger piece of the company?
One of the best pieces of advice we can give you is, hire a good accountant as soon as you can. A good accountant can mitigate a lot of money arguments. They can determine who gets what, how payroll should be set up, whether it’s a bad idea for you to take on debt and help you set up systems to ensure you have good financial practices that protect all the partners and the business.
Money in partnerships can become very emotional. A good accountant take the emotion out of a lot of money discussions!
You’ll also want to ensure you have conversations and systems set up right from the get go. Here’s a few things you’ll want to talk about:
how you will spend money?
who will have access to the money and financial reporting?
how are large purchases handled and who signs off on them?
do you need two signatures for a cheque to be written?
will you put your personal money into the business to keep it running if necessary? Will it be equal contributions amongst all partners and how will that money get paid back?
what if one of you needs to take an owner’s draw for personal reason but the other doesn’t
what happens if one partner wants to leave? Will there be a provision for the other partner(s) to buy them out?
Make sure you schedule regular meetings - weekly or monthly - to discuss finances. All partners should have access to monthly profit and loss reports and you should review revenue and expenses regularly as a group. Everyone should understand the business’s cash flow and which products and services bring in the most revenue as well as which are the most profitable. All upcoming major expenditures should be discussed and you should all have input into the company’s annual budget and longer term financial planning. Again, an accountant can make this a smoother process!
How Do You Tackle Who Does What?
Early on you’re going to have to decide who does what - especially with the big buckets like sales, marketing, finances, administration, product developments and customer service.
As mentioned earlier when you’re considering who to take on as a partner, ideally you’ll be in a situation where you have different skill sets and the division of labour is quite organic. Do you have complementary skills? Everyone is probably going to have to do something they don’t enjoy but everyone should also get to do something that they find really fulfilling. Make a list of the items you know you’ll have to split up amongst you from the get go and have a conversation about who should do what.
There will be things that none of you will want to do but in the early days, you might just have to draw straws until you have enough revenue coming in to hire somebody that you can outsource certain tasks to like bookkeeping or social media or admin work.
It’s also good to have some overlap so you can cover off each other’s jobs when things are busy or when one person is away.
Stay Out of Each Other’s Lane
It’s important that you all have ownership of the areas you’re responsible for. You need space to get your work done and vice versa. This comes with time and trust but you can’t micro-manage each other. Big decisions need to be discussed and important items need to be shared but ultimately you do have to give each other room to get your work done.
How Do You Break a Tie?
When you’re in a multi-partner arrangement and you need to make decisions and there’s some disagreement, there’s a simple way to deal with it – have a vote! Majority rules.
But when there’s only two of you it’s not so simple. There’s two solutions: compromise or making a more compelling argument.
If you have something you really want to do within your business and your partner isn’t convinced, you need to make a case for it – research what you want to do, present the pros and cons and explain why your business needs to do this. This is a good exercise to do for you even if you don’t have a partner - just to see if your own idea is worth pursuing.
There are also times where you never quite see eye to eye and this is where you’re both going to have to give a little bit. Just like a marriage, compromise is a key part of a business arrangement.
Communication Is They Key
In any kind of long term partnership, communication is the key. Communicate, communicate, communicate. You can’t over communicate in a partnership!
When there’s several of you and you have an argument, there’s space for people to walk away from each other and have a time out. When there’s only two of you, that’s not always the case. There will be times where you have to put on a united front even though you’ve just had an argument (just like parenting children – you may have a fight with your spouse but 10 minutes later you need to put on a united front when it comes to whether your not your kid can have more screen time)
Keep an Open Mind
It’s important to keep an open mind. When your partner comes to you with a new idea, don’t dismiss it or make light of it. If you don’t think it’s a good idea, give them the opportunity to make a case for it.
Appreciate Your Differences
There is a learning curve when working closely with a new human – it takes a while to learn each others rhythms and get past the “being on your best behaviour” stage. Your partner(s) are going to have quirks that drive you crazy. They’re going to have different working styles and different personality traits.
Part of your job (and the job of your partners) is to learn to embrace each other’s differences and figure out how to work with each other. One of the things you need to ask yourself when your partner handles something differently than you would is does how they do things impact the health of your business? Do they get their work done? Are your customers happy? Is you business healthy?
There are things you’ll need to let go – especially if you’re the only one that’s bothered by them and they’re not impacting your business at the end of the day. If your partner holds their pencil oddly and it drives you crazy, who is the one with the problem? Well if your partner is still able to write and erase and do their work, you’re probably the one with the problem and you need to let it go!
Have Check-In Conversations
Have regular check-ins with your partner to make sure you’re both doing ok. At a minimum, weekly meetings are a must - preferably in person or by video chat or phone. Be careful with becoming too reliant on text messaging or emails - they leave a lot of room for misunderstandings to flourish!
Go over what you’re each working on, review any issues that have come up with clients, identify any bottlenecks in your process. Find out if any of you are waiting on the others for certain pieces to get finished.
Some other questions to check in with your partner(s) regularly with are:
is there anything that’s making you uncomfortable right now?
what’s your biggest frustration at the moment?
are you getting to do work that makes you happy?
is there anything you need help with right now?
Putting Boundaries in Place
You can’t be in each other’s pockets all the time but it can easily happen in a partnership. You do need to set boundaries on when and how you communicate and when you meet and when you’re expected to be available to work. There has to be some commitment to specific times of availability but there also needs to be respect for each other’s personal lives.
How much you’re involved in each other’s personal lives can vary greatly from partnership to partnership but it is important to keep a line of communication open when it comes to what you all do after hours. If your partner is going through a major life event behind the scenes, it can impact their work so it’s important that you do share to a certain degree even if it’s just so that you can offer to lighten each other’s load at work while they work through anything happening at home.
Business partnerships can be tricky to navigate but, they can also be incredibly rewarding. A solid partnership where everyone is on the same page and brings different strengths to the table can be a tremendous asset and can take you farther than you might be able to go on your own!
