by Ronald Nzimora

Most new business owners seek partners because they’re afraid and are looking for ways to minimize risk. That’s foolishness in my opinion. If you don’t believe in your idea enough to try out yourself ALONE, you might as well give up on it, don’t drag someone else into it.

Avoiding The Business Partnership Sinkhole: How Not To Hate Your Friend For Two Years And Develop An Ulcer In The Process

“Do not build a business on friendship, rather, build a friendship on business”. – J.D. Rockefeller

It was J.D. Rockefeller who said, “Do not build a business on friendship, rather, build a friendship on business”.

Wise words.

In 2009, I went into a partnership with two friends of mine. Six months later, the partnership went belly-up. I hated one of them with so much passion (we only made up after two years) and the other, I simply placed in the acquaintances list.
What happened?

We three made the classic business mistake that involve business partnerships – we went into a partnership without prior determined, written and signed expectations and agreements.

I won’t bore you with the ugly details but suffice to say that when it ended, I swore never to go into a partnership ever again.
Fast forward to 2014, I entered into two separate partnership agreements again with different people. This time, on the right foundations. These new collaborations are working seamlessly, and will continue to work seamlessly.

Why are these partnerships working now?

Because… I did it right this time.

Here’s what you MUST do before you go into a partnership.

a. Determine what will be sold, how much it will be sold for and how it will be sold.

b. Agree on who does what? Clearly spell out each partner’s responsibilities and have them understand it.

c. Clearly, determine how revenue will be distributed and for what purposes.

d. Write out a separate agreement which spells out exactly what happens to anyone who doesn’t contribute and fulfil their responsibilities to the partnership, how this will be measured and have each partner sign it.

e. Agree on the exit plan for each owner (if they want to exit) and the business BEFORE you start

f. Register the business as a corporate entity with a government body, in this case, the Corporate Affairs Commission, no matter how expensive you think it is. This will save your ass BIGTIME!

g. Implement everything in the agreements to the letter, no sentiments.
Now having said all of the above, there’s absolutely no reason why you should have a partner for your business. Avoid it if you can. It’s just extra baggage that is more often than not unnecessary.

Most new business owners seek partners because they’re afraid and are looking for ways to minimize risk. That’s foolishness in my opinion. If you don’t believe in your idea enough to try out yourself ALONE, you might as well give up on it, don’t drag someone else into it.

If the idea works out, you’ll only have diluted your ownership of the company and the idea. If it doesn’t you may unwittingly create a silent enemy who’ll resent you.

Now if I’m saying this, why have I decided to work with two different teams?

The answer is simple.

In the first instance, the business was already working, their new model had been proven, but they needed money and ideas to make it dominate their niche. So I was invited to join the business.

In the second instance, the partner had skills that I lack. My fellow co-founders had the skills I lacked – programming, and another owns the rights to the name of the product. It made more sense to team up with them and create a company together.
So the exceptions are, go into a partnership if:

You’re invited by someone else and you believe the idea is viable or if you don’t have all the skills to accomplish and make the idea happen.

Another reason should be if you don’t have the funds to execute your idea. But first try EVERYTHING you can to raise it yourself.
Asides the above, there’s absolutely no reason to take on partners.

Avoid it if you can. Embrace it if you can’t for the reasons above and make sure you follow all the rules.

Don’t create an unnecessary enemy.

And don’t develop an ulcer.

 

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Ronald Nzimora runs Profits Marketing Systems Limited, an online marketing communications and publishing firm. He’s also invested in two more.He tweets from @ronaldnzimora