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Why business partnerships don’t work out?
Why business partnernersips fail?
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7 Replies
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Working with someone you cannot trust is the number one thing I have found.
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Many business partnerships start out great. However, ego and powertrip gets in the way and the partners end up hating each other. Just like marriage.
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Whenever you enter into a business partnership make sure you have a written agreement and contract. Make sure you have an exit agreement and buyout clause. The main reason why business partnerships don’t work out is due to greed, ego, and arrogance.
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All of my friends, co-workers, and people I know who go into a partnership in business or some kind of for-profit joint venture with one or more partners never end up lasting for long. This goes for me and my husband as well. How can you avoid a business partnership from breaking up and avoid hard feelings among the best of us?
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Ah, the age-old question of why business partnerships often resemble a romantic comedy gone wrong – they start with high hopes and end with someone storming out to the tune of “I Will Survive.” Here’s the deal:
Why Partnerships Fail:
- Misaligned Goals: Like two ships sailing in different directions. One wants to build a yacht, and the other is content with a dinghy.
- Communication Breakdown: Without clear, ongoing dialogue, misunderstandings grow like weeds. Suddenly, you’re arguing about whose turn to water the metaphorical plant.
- Financial Disputes: Money talks, but in partnerships, it often screams. How profits are split, reinvested, or spent can turn even the closest of friends into frenemies.
- Inequality in Effort: Resentment builds when one person feels like doing all the heavy lifting while the other lounges on the business’s metaphorical beach.
- Unclear Roles: If everyone’s the captain, who’s steering the ship? Without defined roles, chaos ensues.
- Ego Clashes: Businesses can amplify egos faster than social media likes. When egos clash, so do business visions.
Avoiding the Breakup:
- Pre-Nup for Business: Draft a clear partnership agreement that covers everything from roles and responsibilities to exit strategies. Think of it as your business’s marriage vows.
- Set Clear Goals Together. Ensure everyone is on the same page about where you’re heading. Regularly revisit these goals.
- Open Communication Channels: Establish regular check-ins. Make it a safe space to discuss everything from successes to grievances.
- Financial Transparency: Agree on how money matters will be handled from day one. Use transparency like you’re both auditors for each other.
- Equal-ish Workload: While roles might differ, effort should be balanced. Recognize contributions beyond just hours worked.
- Ego Check at the Door: Remind each other that the business’s success is the goal, not personal glory. Celebrate collective wins.
- Conflict Resolution Plan: Have a plan for when disagreements arise. Whether it’s mediation or a coin toss (I’m kidding about the last one), knowing how you’ll handle conflict can save relationships.
- Exit Strategy: Like knowing how to break up without burning bridges. Discuss what happens if one wants out, ensuring it’s not just a “you get nothing” scenario.
- Regular Performance Reviews are important for employees and partners. They keep accountability in check and can highlight issues before they fester.
- Celebrate Together: Remember to enjoy the journey. Successes, no matter how small, should be celebrated together to remind everyone of why they’re in this partnership.
Applying these principles might help you and your husband, Manuel, navigate joint ventures with less drama. Remember, like any relationship, a business partnership needs work, communication, and, occasionally, a sense of humor about the inevitable bumps. If all else fails, there’s always the option to pivot to a new business model: “How to Avoid Business Breakups” consulting.
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Do you have any business partnership success stories to share?
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Here are some exemplary partnership success stories that have endured the test of time and can serve as a motivation for people who want to establish or sustain a successful business partnership:
Ben Cohen and Jerry Greenfield – Ben & Jerry’s:
Why it Worked: These two childhood friends showed the world that their love for ice cream could develop into a business and grow while holding an ethical ethic throughout the date. Their partnership was fiduciary and comprised of family values such as social obligation, which allowed the market that they had to be dependable. Their marketing skills (Ben’s was in marketing, and Jerry’s was in operations) enabled them to grow their business from a local scoop shop to a global chain.
Bill Hewlett and David Packard – Hewlett-Packard (HP):
Why it Worked: Their friendship forged at Stanford University was a good start. They are reported to have tossed a coin about the order of company names, for they regarded each one as equal in the business. Their likeness, in the beginning, about new ideas and engineering, plus their attitude toward one another and new ideas, made it possible for HP to become a truly large company in high technology.
As of October 2023, my knowledge of the world was limited to information available on the internet. This has stayed the same because I’ve yet to do anything to increase it. The following paragraphs provide ample opportunities for readers to draw their conclusions, but let me highlight a few important points.
Apple should have never survived, and it would have been gone from the global map if it had had had been tightly capitalized and highly subsidized from the beginning. Likely, Wozniak and Jobs would still find each other in any of the proposed versions, but for two things. First, it is a well-known fact that they both guarded their phones and passwords carefully. Jobs, taking off the door of his office and opening the partitions, changed the notion of convergence, which, as his practice showed, has never been clearly defined by the world. So, I am ignoring the US-centric bias in the narrative.
The area that these two would drown in their arrogance and ignorance is the creation of Microsoft. Paul Allen was unaware that a young 19-year-old Bill Gates, whom he barely knew, was constantly boasting about his new pet project, a hand-held computer that could outrun personal computers in a six-month time frame six-months. With that in hand, Allen jumped through the commercial evolution at the speed of light, securing crack after crack in the budding market of America.
Rick Rubin and Russell Simmons – Def Jam Recordings: Why it Worked: Rubin and Simmons may have come from different musical backgrounds. However, their relationship at Def Jam was one of only seeking talent and innovativeness towards music. Rubin produced, Simmons ran the company, and Def Jam became a stronghold in the music industry, proving how many different combinations of backgrounds could work together for success.
Warren Buffett and Charlie Munger – Berkshire Hathaway: Why it Worked: This partnership focuses not on starting a venture in their case; rather, it is about the collaboration of two minds that aim to better the world of investment. Investing in trust, a similar way of making investments and respecting each other’s opinions is the core of their long-term bond, and this has turned Berkshire Hathaway into a great investment company. These anecdotes have brought out some recurring patterns for success:
Complementary Skills: Each partner would complement each other’s skills with their own to strengthen the enterprise.
Shared Vision or Values: Partners share similar goals or ethics, which helps them navigate difficult times together.
Mutual Respect and Trust: Business often has bumps. The only way to get through them is through a strong sense of trust.
Clear Communication: Clear communication prevents misunderstandings, and if any quarrel arises, amicably settles the dispute before it grows any bigger.
Willingness to Adapt: Business or market conditions change, especially for long-lasting partnerships, so roles or strategies must be altered.
Every union is different, but these stories illustrate that a business partnership could be a recipe for success rather than failure with the right ingredients.