Partnerships – Beware of Strangers Bearing Gifts

By Richard Milecki

Like eating healthily, partnerships are often touted as the way for many businesses – especially small ones – to develop and grow. Partnerships come in many shapes and sizes such as the two students who meet at university and have an idea for a start up, a company that has a great product but needs to partner up with someone who has the marketing and sales channels they lack, non-profits that partner with business as well as lawyers, venture capitalists and even doctors who set up practice together. There are partnerships between people and there are partnerships between organizations although in reality partnerships are only really between people.

I admit – I am a partnership veteran. Apart from being a member of a kibbutz  – which is probably the ultimate business and social partnership and needs it’s own blog – I have been involved at various levels in a series of partnerships over the years. Most of them ended up in court, with outstanding debt or in tears. Research on the issue shows that 70% of all partnerships fail. That is not a great success rate. It makes even entertaining the idea an irrational notion.

What went wrong in the business partnerships I experienced? In Tuval we set up a pioneering body that provided workshops in experiential learning. You’d be amazed how much this excited people 17 years ago. We went through a series of partnerships or attempts at partnerships that were based on us being the naïve new boys who “needed” the older more experienced sharks to help us do business. These partnerships never worked. Even if on paper the partnerships looked great, a business relationship based on patronization and a big status gap is doomed to failure and heart ache.

Once I was involved in a business partnership that was based on friendship and a common vision but when the vision changed and with it the formerly agreed upon business goals, the team’s partnership crashed and burned in the night sky. No partnership can survive a split in vision and goals. You can not even say “let’s get going and we will fix it later” as everyday you go in different directions costs everybody time, money and frustration.

There are of course benefits to partnerships that keep people in search of their business soul mate. In Micheal Eisner’s “Working Together: Why Great Partnerships Succeed?” he talks about the one main output of working in partnership – happiness. Happiness is knowing that you did not do it alone, that you managed to share the load, the effort and the success. In the end it is much more fun to do things with other people. Happiness is usually a tall order and partnerships are just as much so.

The interesting thing is that the really good partnerships that I have experienced or that are quoted in the business press appeared to have just “occurred”. After a short courtship, everything – money, vision, interpersonal chemistry and trust – was in place and the partnership worked. After the initial “click” it does take a long time to build up a good partnership. You need to work on all the issues that all businesses work on only more so as everything has to be shared between the partners. These include financial transparency, clear remuneration and ownership policy, an agreed on vision and plan of action, formal channels of communication and trust.

There is one issue that is in my experience make or break. After you have met, talked, studied, deliberated, done due diligence, discussed, planned and debated, before you signed on the dotted line ask yourself some questions: Does this feel right? What doubts do I have? What annoys me in communicating with the prospective partner? What tough issues have not been resolved? If the answers to these questions leave you cold then my advice is to pull out.  I have never seen a small problem at the outset of a partnership that did not become a huge one down the road. Becoming part of the 70% failure rate is no fun at all. Image

Resources

Eisner, MD  Working Together; Why Great Partnerships Succeed? Harper Collins, NY, 2010

Internet

http://www.businessweek.com/stories/2008-11-21/contemplating-a-business-partnership-businessweek-business-news-stock-market-and-financial-advice

http://www.forbes.com/sites/amandaneville/2012/12/09/top-3-qualities-of-a-successful-business-partnership/

http://www.forbes.com/sites/amandaneville/2013/03/01/why-partnership-is-harder-than-marriage/

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