Be Mindful of Who You Form Partnerships With

Partnerships can be a great way to start up a small business with little or no upfront costs.  In a partnership, the business expenses and risks are typically shared between the partners.  They are also a great way to capitalize on the talents and resources of other people.  Every individual in the partnership should have some form of value to bring to the table. 

Running a successful business requires the ability to manage your own skills, talents and abilities in the best ways possible.  However, you can’t do it all by yourself.  Business owners are responsible for many roles:  Creating or finding products and services to sell, marketing, leading employees, customer service, managing business finances, etc.  There are only so many hours in the day, and one person can’t expect to accomplish all of these tasks alone.

Therefore, forming alliances with people that share the same work ethic, ideals and objectives is helpful.  Burnout is inevitable for the business owner that thinks he can “do it all”.  Trust in partnerships is essential as well.  I have heard many sad stories about unscrupulous business partners, who swindled unsuspecting investors and partners out of their money and time.

Several weeks ago, I spent some time with an old friend, who I will call Alice.  She made a proposal to me, that we should become partners in a new business venture.  On the surface, the business plan that Alice proposed sounded good.  She claimed to have access to a steady stream of business.  There were a few things that made me feel quite reluctant to enter into any partnership with her.

For one, Alice is spreading herself out to thinly.  From all that she explained to me, it seemed that she had way too many projects going than she could handle.  She runs a consulting company, community outreach projects, a religious ministry, retailing business, and many other things going.  In essence, she spends most of her days, busy doing nothing.  Her time is consumed doing tasks that are neither effective, nor productive.

On top of that, Alice didn’t appear to be very happy in her personal life. I observed the way that she and her husband interact with each other.  I don’t want to go much into detail, but it is obvious that she has marital problems and financial stability problems.  Also, she is not taking time out to properly care for herself.

Her marital problems may be a major source of distraction and stress.  Alice’s husband is very domineering and psychologically abusive.  Years of marriage to an abusive spouse, can have a negative impact on a person’s self-esteem and self-confidence. I didn’t want to be intrusive or overstep my boundaries with Alice.  I reserved my opinion on that matter to myself.

During the course of our conversation, she admitted to me that her consulting business is not profitable. She doesn’t have enough clients to earn a full-time living from this business.  Another, thing that was unsettling to me, is that this consulting business may border on engaging in unethical activity.  I won’t discuss exactly what she does in her consulting firm. From what she described, there was nothing illegal about her business activity.  However, there is the potential for her to end up in legal hot-water if she makes any documentation errors.  I pointed this out to Alice and she became very defensive, so I changed the subject.

Alice is not a stupid person by any means, but she seems scatter brained at times.  She doesn’t properly plan things out in her daily routine and ends up wasting time and money as a result.  My advice is that she should focus on making adjustments to the core consulting business that she is already running.  Her time is better spent figuring out what she is doing wrong, and how to boost profitability in her current business.

When entrepreneurs lack laser focus in their core business, this is a detriment to their business.  They run the risk of being ineffective and providing mediocre to poor quality products and services to their customers.  This in turn will ruin the reputation and good will of their business.  It’s no wonder that she has problems with customer retention:  They are probably just as confused as she is and dissatisfied with her service!

I spent the better part of an hour brainstorming with her on ways that she could market and improve her business.  I emphasized that she would be much more effective and productive if she were to become an expert in a handful of core skills, rather than mediocre at several skills.   I am not sure whether she absorbed this or will act on any of the suggestions.

I get the impression that Alice has not invested enough effort into making her business successful.  She doesn’t have the patience and tenacity required to see her business through until it becomes profitable.  Most businesses fail within the first five years.  Otherwise, it takes at least a few years for many businesses to turn a good profit.

Alice hoped to start another business with me, in order to compensate for her current business failures (I think). She also wanted to take out a loan to start the business, which is not a good approach for the type of business that she wants to enter.  I think that this is a mistake that many new business owners make. They don’t give their new business enough time and room to grow.  Some of them take on unnecessary debt to start a business.

Some new business owners want to start out big and some don’t realize that there is a learning process with business. They become impatient, frustrated, and ultimately lose their passion.  Then they move on to the next get-rich-quick scheme.  It’s a form of “shiny ball syndrome”, really.

Partnerships can be lucrative and positive.  The caveat is that you should choose your partners very wisely.  Going into partnership with the wrong person(s) can be draining, both financially and psychologically.  I wished my friend luck, but politely declined her partnership proposal.

 

© 2014 Susan Broadbelt