America is a nation of entrepreneurs. Americans are encouraged to start their own businesses and strike out independently. And of course, there are some benefits to doing so. With that being said, it can be difficult to get a new business off the ground without the help of a business partnership.
What can a business partner offer?
Business partners can fulfill many different roles for one another. Sometimes, business partners are creatively involved with one another, with both contributing equally to the running and conception of the business. Others will have the creative and practical aspects of the business fall to one partner, while the other is more involved financially. People find business partners organically or actively seek them over time. But either way, it’s understandable if you might want to begin a business with a partner rather than attempt to run it by yourself.
However, working with a business partner may be more difficult than you expected. It’s not uncommon for business partnerships fail. Or worse, they fall through after the business has been started, leaving one partner with the business or even both fighting over it. A business partnership failing can tank a new business entirely, or leave it crippled. In fact, up to 70% of all business partnerships fail. And even though a business can recover from this event, it’s best if you at least have the idea that your business partnership may not work out, either so that you can avoid it entirely or so that you can move first.
Let’s look into some of the signs that a business partnership might fail.
Evasiveness
If you’re going to start a business partnership with someone, you need to be completely honest with them about where you stand professionally and what could affect the business. But you must expect the same of them in turn. If a business partner is being evasive about their finances or even their credit score, you need to consider whether or not they’ll keep other things regarding the businesses from you. For example, one-third of all Americans have poor credit.
No matter how common poor credit is, however, it can still affect your ability to take out a business loan and do a number of other things that are a necessary part of beginning a business. If your business partner is legally attached to the business, as they should be, their poor credit score could keep your plans from moving forward; and if they aren’t open about those details, among others, you need to reevaluate your business plans. Take to heart those vague answers and delays.
Inconsistencies
If it seems like your business partner is saying that they can move forward in September at one point and then suddenly push those plans back to November a week later, it could be that something unexpected occurred. Or it could be a warning sign that you need to take seriously. Look not only at how many inconsistencies are occurring, but how your business partner deals with change.
Inflexibility
Starting a business requires adaptability and a good bit of fearlessness. It’s not for the faint of heart, and if your business partner is unable to roll with the punches or is overly cautious due to fear, they may not be the right person to work with. Starting a new business is never a sure thing. Therefore, you need to work with someone who is ready to take the risks necessary. According to the McKinsey Global Institute, between 25% and 45% of all new products fail. If your business partner isn’t ready to take the chances necessary, they may not be right for you.
An Inability To Take Responsibility
Business partners need to take responsibility for their share of the business and the work. Whether that means taking responsibility for creative choices or tasks that need completing, or if that means taking responsibility for your financial commitments. When a person is avoiding responsibility, they need to reassess whether or not they’re ready to commit to the business entirely. And it’s your responsibility as a business partner to be upfront and ask your partner if they’re really ready to do the work that you’re willing to do.
Unequal Enthusiasm
It’s incredibly difficult to start a new business. Therefore, you need to be passionate about it, even if you’re more of a business partner on the financial end of things. That requires enthusiasm as well, and if you have more enthusiasm than your partner, they will probably struggle with commitment down the road and may even ultimately back out of the partnership unexpectedly. You need to protect yourself, and part of this means stepping away from your own enthusiasm and honestly assessing whether or not your partner is on the same wavelength.
There are so many issues that come up when you enter a business partnership. It’s deeply rewarding, but there is also a lot of risk. But if you’re forthright and assess the risks carefully, checking in with your partner often, you’ll be much safer in the long term.
Photo Credit: stock photo
When considering a business partner, you ought to look at how he / she and their parents earn a living. This may sound prejudiced but I want to partner with someone who has a successful entrepreneur parent, or someone in the private sector who grasps that the more you put into a project, the more you will get out of it. I would usually (always an occasional exception of course) never partner with a government worker or a teacher. That’s because people who work in these areas have never experienced earning more by working harder. They show up, do what they do and get exactly the same amount of money as a similar person who works super hard and is very productive or is a lazy slacker who doesn’t do their job. They also are never fired for not producing because of tenure or government rules. See the “rubber rooms” for bad quality teachers in the NYC school system who literally never get fired once they have tenure. There is no connection between increased production and increased income in these cultures. I want to partner with someone whose father ran a hot dog cart, a trucking company, a garment factory, a restaurant, a non union carpenter or electrician, had a fruit stand, sold antiques, painted houses, ran a tree service, was an auctioneer, repaired computers, owned a cleaning service, was a tailor or a seamstress, or had a bookkeeping business. These people make good partner material because in their mind increased production is linked to increased earnings. If your parent worked for himself / herself, business was discussed around the family dinner table and the children grew up knowing if you didn’t work you didn’t get money and that if you worked harder you earned more money. Now if you find a teacher whose father runs a lawn mowing and yard cleaning business and the teacher pitches in on weekends, vacations and all summer the teacher would be a good candidate. Or a government worker whose family ran a pet grooming shop might be a good candidate. I’d notice whether the government worker pitched in at the family business when things got hectic. I split a booth at an antiques show with a government worker for many years. I like him a lot and he knows his stuff. But I did the bulk of the selling for both of us because I could not stand to see a customer looking at one of my friend’s items and realize my friend was busy chatting up his friends and ignoring the customer. I’d approach the customer, close the deal and give my friend his money. It worked fine. I only needed half the booth so I only spent half the booth rent to display all I needed to display and my friend was happy because so much of his stuff sold effortlessly on his part. He used to joke that I could sell ice to Eskimos (I hope that isn’t politically correct, I’m only reporting what my friend said.) You want to look over your potential partner long and hard before you get tangled up in business. If you partner with a friend who doesn’t share your work ethic you will lose your business, your money and your friend.
Your bias is showing, big time.
70% of all partnerships fail, regardless, which rises to almost 100% with more than two partners other than structures like law offices, etc. I used to teach….. electronics and carpentry mostly, plus worked after school flying bush planes including most weekends, and always took on a construction project over summer and kept on working as the weekend and holiday pilot for a local charter airline. I often took my wife or kids along if I had empty seats. This helped keep everyone supportive of my schedule. Age 69 now, officially retired at 57, and still work every day. My favourite job paid by piecework known as base pay and mileage (flying) because the more I worked the more money I made. The 2 guys I worked for were partners for over 35 years because they left each other alone and seldom even communicated. One was in charge of maintenance and the other was chief pilot. And they left us employees alone to do our jobs and never micro managed. One day ‘the boss’ looked at my pay cheque, whistled and said, “That’s what I like to see. I know when you’re making money so are we”. You don’t see that attitude these days, for sure.
As for teaching, people think because they went to school they know all about it. They know nothing about the job. The job itself usually requires long days far above the classroom schedule depending on subject and lots and lots of prep or marking at home and on weekends. My wife marked papers and lesson planned 2 hours per night…every night, and always worked one entire day every weekend. Report cards were a nightmare and on top of regular work. For me, classes started at 8:45 and ended at 3:00pm, but I was in my shops every morning at 7:00am doing the prep, fixing equipment, whatever was needed to keep things going. I ran three shops during the year and also a computer lab teaching Cad, AutoCadR14 (Mechanics, electronics, carpentry and Cad). I was paid a 107% of top scale because I continually taught instead of using prep time as per contract. (They were short staff). I kept the shops open at lunch for kids that wanted to work, usually the mechanics shop as it was less stressful and I could eat a sandwich on the go. The carpentry power tools are just too dangerous to take your eye off things, ever. My buddy, who taught senior math, was at his desk everyday at 6:30am (calculus etc) and worked every lunch hour for kids that needed or wanted extra help. The worst job for unpaid work is senior English. The marking never ends.
Retired with a defined benefit package because I contributed $1000 per month, every month, which my employer matched as part of my salary. Contributed for 17 years, had a good last year and was asked to take over a carpentry apprentice program but decided I had had enough and wanted to move on. The retirement plan is 105% self funded and is beyond financially sound and offers an indexed COLA adjustment for me every year until I die. The rate earned is based on years of full time service. You receive 2% per every year worked based on your best 5 years. At 17 years teaching I now receive 34% of my salary and I bloody well paid for it. By the way, 30% of new teachers quit after two years and over 50% quit by year 5. There is a reason for that and it isn’t because the job is cushy.
The first day of my retirement saw me in a college welding shop taking my C ticket. Burned rod and cut steel 7 hours per day for 6 months and learned how to weld properly. Built a 40 ton log splitter for home use. Built a truck flatbed. Built a boat.
As a tradesman my wage was far far higher than a teacher salary, both union and non union jobs. Far less stress building. Thinking back I just realised I started working construction at age 13, working at cleaning up job sites for local contractors, then worked for my carpenter brother and other building contractors to earn a red seal (certification). The mechanics came working 2 nights per week and one full weekend day starting at age 15 until grade 12 graduation. Working a non teaching job is a snap compared to the classroom and I’ll give you an example. Have you ever had police and social services come to your work and haul away a child? One nutso parent threatened to come and shoot me because I grabbed his kid to stop him from attacking someone else’s child. In the States a kid might bring a gun to school. A regular job has none of this crap unless you are in health care or law enforcement, all union jobs of course. Unions exist for a reason. 100 years ago if a logger died on the job he was put behind a stump and taken down on the last load of the day. If there is a death in the woods today, the entire company shuts down until the cause is known and can’t be repeated. You have a lunch break every day? Thank unions…just sayin’. I have a good friend whose uncle was one of those killed guys put behind a stump. He was supposed to be dead, but when they went to lift him up hours later he was still alive. He actually lived for another 20 years. That is why there are unions.
I have always believed, and always will believe, that most people want to do a good job if you get out of their way and let them work. Sometimes employees need some guidance. This includes all the jobs I have ever worked at as either manager or site foreman. To assume a particular profession is full of lazy people is utter nonsense.
As for union vrs non union, it makes things simple for employers. This is the pay rate, this is the job, get it done. We start at ______, don’t be late. There isn’t a different deal for every person. Transparent. In fact, in construction sometimes we were even paid over union rate. The carpenters union business agent showed up one day and asked to see our pay stubs to confirm we were being paid the negotiated rate. He saw we were getting about 15% over scale and said there was no law about stopping employers paying more than negotiated. That was in 1975 when there was less income disparity and good employees were considered to be company assets, not liabilities.
Regards