Working with others is difficult as is, let alone when adding personal relationships to the mix. A family partnership adds more challenges, and it is important to consider these before agreeing to work with relatives.
The most critical question to ask yourself is “are you bringing the family member into the partnership because they can help grow the business and complement your skills, or simply because they are related to you?”
In my experience, it is often the case that family partnerships are based on the wrong reasons. For example many SMB owners invite their children into the business in hopes that they’ll take over the business, want to help out a family member who is out of work, or hire their spouse as a way to improve childcare arrangements.
Unfortunately, it is often the case that when family is involved, family comes first and the business comes second.
Using my 4 steps from last week, I’ve outlined below what you should consider before adding a family member into a partnership dynamic.
1. Giving Up Control
If you’re bringing in a family member who does not actually have the skill set you need or is not complementary to your abilities, then it is unlikely that you will trust them to effectively do their job and that takes away from your own work and productivity. Think of the value they bring to the business.
2. Setting Common Goals
Sometimes your passion, determination, and perseverance are not mirrored in a family member, so setting common goals can be difficult if they do not feel aligned with the business’s goals.
3. Working as a United Front
Mixing family and work can mean bringing personal matters into your business. What happens at home does not always stay at home! The concern is personal issues may be transparent to staff, clients, and suppliers, which can seriously hurt the day-to-day business operations as well as relationships with stakeholders.
4. Putting the Business First
The old saying “family comes first” applies to many aspects of life, but not business. Involving family means that the business is often going to take a back seat when a family “issue” arises like needing time off, or meeting deadlines. If only one partner puts the business first, then it can not only hurt a partnership, but also hurt the business.
What are your experiences with family and business? Have you ever been a part of a family partnership, or worked with one? Let me know in the comments.
Making a partnership work requires a conscious effort from all partners. As mentioned previously, partners’ skill sets should complement each other. BEFORE you enter into a partnership, evaluate the skills of your potential partners and decide if they complement your own abilities – if so, you are of value to each other!
Once you have entered the partnership, there are a few simple things that can be done to achieve success. Though simple, the following 4 steps are not always easy to follow!
1. Give Up Control
Let your partners do what they’re good at! Trust their strengths and abilities. Your partnership will be much more efficient and effective if you can each focus on what you do best.
2. Set Common Goals
It is important that you and your partners have a set of common goals that you all understand and can rally your staff around. Along with these common goals come roles that each of you will play in achieving them – these roles must be clearly defined. Ensure that the goals are measurable, and assess your progress often with your partners!
3. Work as a United Front
It is important that you and your partners work as a cohesive unit, or at least appear that way in the day-to-day business operations. One should never undercut the other or undermine their decisions when it comes to staff, clients, suppliers, etc. Disagreements should be discussed and resolved privately!
4. Put the Business FIRST!
All partners must always put the business first. What each partner does outside of work should not affect the business, and the business is not responsible for a partner’s personal endeavors. For example, the business’s line of credit is not to be used for a partner’s new home. As silly as that may sound, it happens far too often!
As with any relationship, if you’re willing to put in the time and effort to make it work, you’ll reap the benefits! Follow these steps and you’re on your way to a successful partnership.
Do you have any tips and tricks for working successfully with a partner? Let me know in the comments!
Have you considered forming a partnership with someone who has complementary skills and/or the financial strength that can help your business? In my 30 years of business experience, I have seen both the positive and negative aspects of partnerships. They are always formed with the right intentions, but unfortunately they do not always result in the desired outcome. In fact, over half of partnerships fail.
I have outlined below four of what I believe are the primary reasons partnerships do not succeed.
1. Unclear Roles
When the role of each partner isn’t clearly laid out from the beginning, conflict is bound to arise down the line. When everyone has the “boss mentality”, it only leads to trouble.
Partners must understand each other’s strengths and learn to trust each other. Open communication is crucial to a successful partnership. It is important that partners are transparent in all of their activity within the business and feel comfortable sharing their thoughts and opinions.
2. Unclear Long Term Goals
Before a partnership is even formed, both parties must discuss their long-term objectives; if these do not match up, there is bound to be a problem in the future.
For a partnership to be successful, each side must clearly define their expectations and aspirations for the business. It does not stop there however. These expectations and goals must be reviewed regularly. All partners should be on the same page throughout their partnership, or at least in the same chapter!
3. Dispute Resolution
Undoubtedly there will be disagreements in any partnership, so it is necessary to instill a procedure to follow for quick resolution. Whether the partner with the most experience has the final say, a compromise can be made, or a third party decision maker is involved, there must be a defined resolution strategy.
4. Disregarding the Formal Agreement
Having a formal shareholders agreement is often overlooked in many partnerships, but it could not be more necessary! Do not disregard these because of their cost or time commitments, you will regret it if something goes seriously wrong.
The document should cover compensation, exit options, death, and other important topics. Everyone’s interest should be protected. Alternatively, it can prove to be very beneficial to develop a charter: a non-legally binding document that creates a structure for the working relationship of both parties.
If you’re entering a partnership, be sure to take all the right precautions to ensure that the relationship will be a healthy and sustainable one!
What are your experiences with partnerships? Let me know what you think in the comments!