The new year is underway and you’re ready for a change. It’s time to start your own venture but resources are limited and you have an opportunity to partner with someone who can bring something valuable to the table. However, you’re hesitant because something inexplicable is telling you there’s trouble ahead. You wonder why you’re holding back because everything seems to fit. Well, it’s likely your intuition; after all, Murphy’s Law states, “If something can go wrong, it probably will.”
Dave Ramsey’s Five D’s of Partnerships
It’s known roughly 80 percent of all business partnerships fail. According to radio host, author, and speaker Dave Ramsey, there are five reasons why: death, disability, disinterest, drugs, and divorce. You can also add dishonesty and default to the list. While there are ways to build successful strategic partnerships, it’s much more difficult to establish and grow a long-term “50-50” business partnership. And, it’s often for the reasons above.
You generally spend more waking hours at work than at home, which means you have more opportunities to interact with your business partner and the nature of your interactions tend to be more intense, with more potential for conflict because there are so many external variables that are beyond your control. —Forbes.com
When trouble is on the horizon and it’s an employee giving off bad warning signs, you can simply terminate the relationship. Unfortunately, the same typically isn’t true of partnerships. Legal entanglements make it difficult and business partners try to work out compromises. But that’s just the beginning of larger struggles. So, what are your alternatives? What arrangement can you make with someone to get your idea off the ground without forming a business partnership? Here are some suggestions for alternatives to formal business partnerships:
- Form an employer-employee relationship. Okay, so you have a great idea and plenty of passion but are unsure about your potential partner’s ambition. So, form a business and hire him or her to work for you. This approach solves a lot of problems and best of all, you keep the entity if he or she experiences one of the five D’s of partnerships. Or, if he or she has the start-up money, work for him or her with the stipulation you are free to part ways without signing a noncompete agreement.
- Go into a coworking space. Coworking spaces are increasingly popular. These are open office spaces where entrepreneurs work around one another, interacting regularly, but not entering into formal partnerships. It’s a great way to bounce ideas off of one another, get referrals, and find inspiration and motivation. It can also lead to forming one or more strategic partnerships, creating a less risky, win-win scenarios.
- Try a strategic partnership. There’s nothing wrong with entering into a strategic partnership with an established business. You provide X and the other company provides Y. You’re not legally connected, don’t necessarily share the same space, but both benefit from the relationship. It’s a way to grow your own business while not having to worry about what he or she is doing or isn’t doing for your venture.
- Consult a business coach. If you just need the expertise, speak with a business coach. Someone who has been there before and knows different industries. A professional who can help you navigate through the enterprise world will do a lot to bring your idea to fruition. Plus, you receive the huge benefit of insight without having to enter into a formal business partnership agreement.
What is your experience with partnerships? Have you had success or problems? What advice would you give others? Please share your thoughts and experiences!