Should You Get a Business Partner for Your Lifestyle Business?
Shout to Lewis from the DC for inspiring this post.
Forbes’ recent feature of Dropbox told the story of how Y Combinator’s Paul Graham insisted that the founder, Drew Houston, find a co-founder before he received funding. This is a common refrain for Graham– he believes partnerships are explosive.
I agree.
Partnerships can catapult you ahead of the competition or blow up in your face. In the case of my first business, having solid business partners was a critical element of our success.
Finding the right partner for your lifestyle businesses is tricky as hell.
In general: if you are gearing up for a sprint, partner. If you are planning on a long haul, go it alone until you get swept off your feet.
Most importantly: do not partner out of convenience, fear and loneliness, for skill set acquisition, or for basic cost savings.
I Would Get Married, But Since Ian Owns 50%, I Can't Afford to...
Imagine I came to you and said the profitability of every single widget you sell would be reduced by 50% overnight.
Business partners are expensive. It’s easy to get resentful and frustrated about writing a check for $.50 on every dollar you earn. That said, that $.50 is the best investment I’ve ever made in my business. Here are some of the reasons:
Advantages of having the right partner:
Divide and conquer. My company has 2 full time contributors with CEO potential for world class prices (that’s free!!). When we were operating in small markets (less than 5 million global market cap) we were able to be highly aggressive with our competition– they simply could not afford to hire people to do the work that Ian and I could create on our own. As our business has grown, I’ve been able to take 12 months to start a new company for our portfolio without having to worry much for our core business. We haven’t yet had to hire an expensive manager to take over the company. These kinds of hires can cost your company way more than the ticket price.
Fun. If you can follow some of the basic considerations listed below, having a business partner is super fun. As with most friendships, having joint projects to work on together enriches relationships. Toss a business in the mix that has the potential to change your lives, and you’ve got tons of fun phone calls every week. Good times!
Accountability. It’s tough to stay at it everyday, year after year. Business partners have the potential to provide you with high level accountability and push you in ways that is difficult for employees.
Tips for finding partners for your lifestyle business.
I don’t not know how to find one (blogging probably helps!), but I do have some thoughts on how to identify one and work with them.
Don’t partner with somebody who is close to you already because it is convenient. In lifestyle businesses (read not 10x venture backed stuff) it’s more important to focus on compatible personalities, ie friendship/respect, than complimentary skill sets.
In a 50/50 partnership it’s generally important that both partners have similar financial situations and goals. In start-up phase it’s worth discussing the role of outside projects and jobs. I think in general you should make it so that both parties are making the same amount of money from all projects on the dashboard.
Partner with somebody who likes to have the hard conversations (in fact, thrives on them) and doesn’t have big blind spots or sensitive topics they don’t like to bring up. Everything is on the table, that includes your girlfriend, your party habits, you name it. Getting a business partner is like getting married.
Don’t rag on your business partners weaknesses, help them amplify their strengths. It would be easy for Ian to walk around all day long in a huff about how frustrating my attention to detail is. Instead he understands some of the inevitabilities of working with me and pushes me where I’m strong to create more value for the company.
Have a great project, vision, and dream. Nothing pulls people together like a shared purpose that is exciting and robust.
Especially for lifestyle businesses, having partners is like getting married. Ok, so I’m not married so I can’t say for sure, but at this point with Ian taking 50% I can hardly afford it!! :) I think framing up business partnerships like marriages is the best way to accurately consider how that relationships will impact your life.
If you haven’t yet found the perfect business partner…
Find an accountability partner. That’s one person who has a similar business or ambitions who is willing to get on the phone once a week for an hour. You’ll get a HUGE amont of the benefits that come from having a business partner with none of the risk or expense.
What do you think? Is a partnerships a sinking-ship or what?
Cheers,
Dan
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