| There are a lot of good reasons to take on a | | | | creating a strategic alliance be as or more |
| business partner - you need an infusion of cash, | | | | effective?" |
| adding a product line will strengthen your | | | | Feeling lonely and disconnected. Wanting to be |
| customer relationships and profitability, or you | | | | part of a team. "How else can I get connected? |
| want to enter new markets. The list goes on. | | | | Will a Mastermind group, strategic alliance or an |
| So why do good reasons turn into bad business | | | | advisory board fill that void?" |
| partnerships? | | | | Geographic or product expansion. "Will a |
| I've worked with numerous business partners, | | | | strategic alliance, outsourcing or acquisition work |
| usually after they've decided to partner and are | | | | as well or better?" |
| now heading for a break-up. Over the years, I've | | | | Lesson #2: Don't assume, just because you've |
| uncovered several avoidable causes of bad | | | | worked together before, that you know your |
| business partnerships. | | | | prospective partner on a deep enough level to |
| Take the case of Tom and Mary. They had | | | | create a successful business partnership. |
| worked together before and respected each | | | | You're thinking of partnering with a former |
| other's work. When Tom left the company and | | | | coworker - someone you've worked with in |
| decided to go into business for himself, he | | | | another company. You reason that you got along |
| encountered a prospective client that wanted | | | | well then, he's a hard worker and he brings an |
| Mary to be on their account. So what did Tom | | | | expertise to the business that you don't have, so |
| do? He invited Mary to join his company as a | | | | it will be a perfect match. |
| 50% partner and figured it was a small price to | | | | Will that be enough to create a successful and |
| pay for this first stellar client. | | | | sustainable business partnership? Not necessarily. |
| Fast-forward 3 years and Tom is angry and | | | | Take the case of Richard and Bill. After leaving |
| resentful because Mary is a great account | | | | their former company several years ago, each |
| manager, but a lousy business partner. As the | | | | formed their own company, in a similar field but |
| company has grown and gained new accounts, | | | | with unique niches. Two years later, while they |
| the value of that first account has lessened and | | | | were both successful, each wanted to take their |
| now Tom is wondering how to get back a | | | | company to the next level so they began a |
| majority of the equity in the firm. He has become | | | | conversation about partnering. |
| increasingly belligerent to Mary and Mary | | | | They reasoned that by merging their two |
| epitomizes the walking wounded. | | | | companies they would be able to offer their |
| There is rarely just one reason for a faltering or | | | | market "one stop shopping" in the field of |
| failed business partnership. In Tom and Mary's | | | | communications. They also assumed that having |
| case, the first wrong turn came when Tom didn't | | | | worked together before, they knew enough |
| ask himself how else he could get Mary, get the | | | | about each other to make it work so they took |
| account and not give up 50% of the company. He | | | | the plunge. Richard and Bill made it legal, created a |
| was too excited and too eager to sign the deal. | | | | new name for the company and sent notices out |
| Would Mary have come over as an employee or | | | | to their clients and industry. |
| for less equity? No one can say for sure now. | | | | Two years into the new partnership I was called |
| Lesson #1: Whatever your reason is for | | | | in because frustrations were on the rise and |
| considering a business partnership, ask yourself, | | | | things weren't going "according to plan". After two |
| "How else can I accomplish it?" | | | | meetings they discovered that they were not at |
| Below are some common reasons people take on | | | | all on the same page when it came to their |
| a partner and a few of the questions they might | | | | personal visions for the business and their |
| ask themselves before deciding. | | | | individual expectations for roles and responsibilities |
| Need for a specific expertise (sales, financial, | | | | were completely different. They decided to |
| etc). "Would hiring someone, outsourcing or | | | | dissolve the partnership. |