So you’re considering a road dog, a ride-or-die, a lugnut-to-your-tire, a butter-to-your-popcorn, a bad-analogy-to-another.
And the reason why is probably because you’re overwhelmed. Which makes sense. Running a business is not meant for just one person unless you’re selling crack rocks to crack pots.
BUT…If you are considering a partner for a business, take heed of this advice BEFORE ALL OTHERS:
Make sure THEY deal with stress well.
But this is a two-sided street too. You also have to know how to deal.
If you are starting something as simple as lemonade stand, you will not work well if the other person is losing their crap at every issue as opposed to talking through stuff to move on with growing the business.
Without knowing how they handle stress, you are setting yourself up for an pencil-in-eye-gouging-time…Because they might lose their head, and lose the business alongside it.
What is a way to test how your potential partner deals with stress? Here are a few:
- See how you work with them [literally do an intense project with them]
- See how fast either of you can get a sale & maintain consistent sales
- See how they react when something doesn’t go their way in personal or business life
- Ask questions about their historical ability dealing with stress.
Now along the lines of healthy stress management…
Here are 5 key things to handle with your potential partner:
1. How do I assign ownership percentages?
Figure out who’s got the sales & experience strengths.
Whoever has this, should have the bigger share of the company-no matter if it’s 1% or 10%. Sales & experience will lead the business further than any other quality because think about it-their foresight for bringing in money will be beyond the other partner, and without cashflow: no business.
2. Ownership percentage & pay percentage should be separate
One great thing I’ve learned from my business partner is the value of obsessively growing the reserve account to expand the company resources (such as staff salaries & office space)…But this takes budgetary discipline.
Budgetary discipline to the degree in which your ownership percentage should not dictate your pay structure, for example…If you are in a 51/49% partnership, you should not be earning that outright from every payout. It should be a salary and/or a smaller percentage of all sales…And everything remaining should be for the company reserve. Just like a baby being supported by the parents, you are feeding your baby until it can grow up and take on lots of responsibilities on it’s own.
3. Budget Discipline
This again goes in line with the first thing I mentioned, you want a partner that is disciplined and won’t go on a spending frenzy buying 5 “company” machine guns. You want a partner that will consult with you on medium to large purchases…And for smaller ones, you should just have a simple agreement that says anything over $100 business expense should be agreed upon by both partners.
4. Losing Sight
One partner should be more of the vision, and the other should be more of the executioner. Or at the very least, a melding of both…Because the thing about being in the weeds for too long, is that you lose sight of the bigger picture.
You could end up developing a business that looks just like corporate America where you’re earning LESS than you did there, as opposed to a culture of creativity and sheer awesomeness where you are earning millions of dollars, and on your way to helping others make the same.
It is for that reason that you should plan a weekly, monthly or even quarterly check-in about where everything is & where it’s going with your partner. Otherwise, you will grow an indignant pain in your heart.
5. Performance
To take on a partner, even with a larger percentage, does not mean either of you get to work more than the other…You are partners so HAVE NO GUILT in owning it forward. If you see performance slip-ups even in the lesser stake, bring it up before it becomes a monster that makes other team members become lazier-which is definitely a thing, because we are leading by example.
Now related to this, in your first 6-12 months, you will start to see patterns of where your business is inefficient…Obsessively note these because someone will have to lead the charge on measuring them to cut them off.
Just like massive companies like Johnson & Johnson obsess over 1 ounce of soap being used to kill profits, you should be obsessed with attacking every inefficient measurement killing your profits.
Get these critical elements in order with your partner,
and you will murder it at the business game.
-Ivan