May 14, 2012, 5:00 am

Partnership Failures and Lessons Learned

by: The Financial Blogger    Category: Business
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It’s a total coincidence, but it seems that I’m making a lot of confessions this week. After telling you how I feel at work (I’m already doing better now!), I want to share some failures I have had in the past with regards to my business ventures. Believe it or not, this is not at my first attempt to build a company and not my first partnership either.

 2 cups

When I was in University, I started a small computer business. We were building new computers and repairing old ones. I didn’t know much about computers (like I don’t know much about tech stuff today!). But I liked computers and already had that entrepreneur bug in me. One of my friends was really good at opening up computer boxes and playing with them. On the other hand, he wasn’t much into sales and didn’t know how to start a small business (account openings, accounting, etc). At first, we thought we could do something pretty good. In fact, we had about $20,000 in sales during our first year. Considering that it was our third job (I was going full time at University and working 35 hours per week on deliveries), I think it was pretty good!

 

Nonetheless, this great partnership ended about 18 months after we sold our first computer. I was going to study abroad for a session and my friend didn’t want to sell computers by himself for 6 months. The company was closed upon my return from Europe without much drama. In fact, it felt like we both have lost the will to continue and wanted to move on… the funny part is that we didn’t have any other side projects and we just stopped having a profitable sideline for no clear reason. Since the computer business is fairly aggressive and new players like Dell were entering the Canadian market, I doubt that we would have built a multimillion dollar company with this sideline. Although I still think that we could have made a lot more money! Ten years later, I can look back and see why we failed. It’s not a specific reason but a group of them.

 

Lack of Planning

 

Most people start their business or sideline without a plan. They think that a good idea, a profitable niche and some talent are enough to succeed. They are all wrong. If you plan to head across the United States by car, you will need a plan. If you only have the good idea (going from the East Coast to the West Coast), with a good car and great friends, this won’t be enough to build a memorable trip. However, if you check out the right roads to pick, the right places to make pit stops and the right cities to visit in between, you can have the trip of your life. This doesn’t mean that you won’t get to the West Coast without a plan, but you may lose your way at times! This is the same thing with a business; if you don’t have a direction, if you don’t know where you are going, you will eventually get lost. While getting lost in a car could lead to some great stories, when you get lost with your business, you usually lose money along the way. I doubt this is what you want!

 

We never took the time to write a plan and it showed. There was no replacement when I left and no way for us to grow rapidly. Fast growth is one of the things that will keep an entrepreneur busy and, therefore, motivated. If you just work your sideline when you have some free time, you will eventually be bored and quit. This is true with your business, your blog and this is also true for most hobbies. Who can say they like soccer and play once every three months? I don’t call it playing a sport!

 

Lack of Communication

 

When I go pee while working on my sites, I tell my partner. This is how transparent we are about communication… okay… maybe I’m exaggerating! Seriously, if you don’t say what you do, what you like and what you don’t like on a weekly basis (we are actually doing it on a daily basis but that’s because we are best friends), you won’t make it over time. It’s important to mention what you don’t like the very same minute it starts to annoy you. If not, it grows bigger, becomes a problem and are then stuck with a huge situation to deal with. Intense communication is always very cool to exchange ideas and brainstorm. Each time I have an idea, good or bad, I send a quick email to my partner. These emails are sent at 4 am when my friend wakes up early and can’t sleep, at 10 am right after I met a client and got a flash or at midnight because we are not both sleeping . We basically send emails every day for anything. Most of our ideas are poor to be honest and the other partner analyzes it in a heartbeat. But from time to time, we generate some awesome ideas and can develop them the very same day.

 

Sharing the Same Goals

 

One of the biggest reasons why you will succeed in your partnership is if you and your partner share the same goals. The problem is it’s usually the case at the beginning of the partnership. But life evolves, you meet someone, get married, move out of town, start an MBA, have kids, want to travel, need money, ready to invest a big chunk of money, etc. We actually went through all of the situations mentioned above and we are still doing business. Why? We share our goals and discuss the company’s situation as well as our personal situation. We then know what to expect from each other and understand that we go through special events once in a while that allow us to work more or less on our sites. I clearly didn’t have see anything similar the first time I started a business and this is why we ended-up miles away from each other and never realized it until the company closed.

 

Blind Trust

 

There is one person that I can trust with my life in this world and it’s my partner. But this naïve confidence doesn’t come from our partnership but from a 40 day trip across Europe when we were 20. We saw each other in all emotional states and supported each other. At no moment did we get annoyed by the other even though we went through some epic debates. And when I talk about epic debates, I talk about two to three hours of debate on a single topic in the middle of a park, a museum or simply in our hotel. I guess this is why I can trust him and he can trust me the way we do it!

 

This Doesn’t Mean That You Should Cover Yourself

 

While we trust ourselves more than brothers, we still setup our business “the right way”. We have a shareholder agreement where we determined how we value the company and how one can buy the other (shotgun clause). If we were ever to split, everything has been written down and agreed in this contract. If you are serious about going into business with someone, you should do everything with the same seriousness.

 

Don’t Think About Money

 

My final advice about having a partner is to avoid concentrating about money. If you do it, you will start counting your hours and watching your friend. Setup goals instead and split tasks. It’s a lot more effective and you won’t concentrate on who’s bringing the money to the table. That doesn’t matter. What matters is if you have fun or not and if you want to grow the business. There is no “star player” on our team, we are just TWO geniuses doing their job ;-) hahaha!

 

Readers, are you or have you been in a partnership? What have you learned from it?

 

 

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Comments

On one hand I hear people say “the only ship that won’t sail is a partnership,” but on the other I do believe that I would be able to handle a side-project partnership as long as the other person brings a skill-set that I lack. For example, I like to write and wouldn’t mind partnering with someone who likes to code on a new site. That way each person could do what they do best.

One person always has to take charge and lead, it doesn’t matter who. If both are kinda don’t really know what to do or don’t have a lot of confidence in his ability, it’s a set up for failure.

My husband and I are partners now and have to follow the advice above. Five years ago, we went into a small gaming business with two other people and just watched in horror as they ran it into the ground after putting months of our life building it up. That taught me that I work best with my husband…

@Crystal,

Do you find it tough to work with your husband and then.. have supper with him? How do you seperate work from the rest of your life?

I actually just wrote a post about goal setting but your point about “lack of planning” really struck a chord when it comes to my business. I mean, I do a great job of setting personal financial goals, but I have not done much in the way of planning for my business. Thanks for the insight!

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