Starting is easy, continuing is hard work. Fewer than 20% of partnerships last for 5 years. Why is this when it all looked so good in the beginning? The main reason for failure of business partnerships is a breakdown in the relationship between the founders. 50% of marriages in the USA end in divorce, often because the couple assumed everything would continue as it started and forgot to put time and energy into the relationship. Leading a business with a friend is even more difficult because there are the additional pressures of money, strategy, and staff. In any business, relationships create culture, and culture creates success. To be successful you have to invest in your relationship.
A great business and a great friendship is a wonderful place to be. A great friendship and a so-so business may be much better than a great business and a toxic friendship. Here are 6 tips to avoid falling out, to remain friends, colleagues, and to be really successful.
1. Be clear about the purpose
Why are you both doing this? If it is just with the hope of making some money, that is unlikely to be sufficient. If you both have a clear passion and purpose that the business will fulfil, this will help you both weather the storms ahead.This is much more than a warm fuzzy mission statement to stick on the wall of your reception. This is something that will be visceral for the two of you and make you want to leap out of bed most mornings eager to make it happen. If your purpose is to buy a Porsche, what happens when you have one. If your purpose is to change the world, then you have a big, challenging, and exciting journey ahead.
One way of eliciting this is to both get a large sheet of paper and some coloured pens. Both draw separate pictures of your life right now, and another representing life as you would like it to be in the future. Share and compare these and see what similarities there are, what differences, and where the business fits into each picture. If there is alignment, great, talk through what you both need to have happen to get you to that ideal future. If there are significant differences, then maybe you both need to be on different journeys!
2. Clarify your goals
Now that you have the purpose and destination in mind, how do you check progress? Clarity on what is important is essential as well as having measures that are both forward-looking as well as retrospective. In the first flush of enthusiasm, regular reporting and accounts may seem dull and a distraction. If you are to beat the 80% failure rate you need metrics and avoid the ‘it will be alright sometime soon’ mentality. You need the discipline of holding each other and the business to account regularly. Otherwise, the dreams will become a mirage.
You also need to build in waypoints so that you know whether you are on course or off course. If the winds or tides have changed you both need to agree on what changes of course are needed.
The length of the journey also needs to be discussed. What is your exit strategy and timescale? There is nothing worse than one of you getting fed up, wanting to launch the liferaft mid-ocean, and leaving the other sailing single-handed.
3. Clarify your roles
There are typically 5 stages of growth in a business. At all these stages the two friends will have different roles. In a new business, the founders do everything. It is fun and engaging to have all hands to the pump. You grow by creativity and shared effort. This is the Birth, the existence stage.
The second stage is Survival, where enthusiasm and hard work needs to generate cash. Where you will have more staff and there needs to be clearer roles and leadership. At this stage, you both need to have clearly defined roles and responsibilities.
The third stage is Success where owner disengagement can happen, and where the business gets grown-up and the necessary but seemingly dull intervenes. You need to have systems, procedures, and delegation. This is the point at which entrepreneurs can suffer a crisis of control as they are no longer deciding everything.
The fourth stage is Take-off where there needs to be more coordination and even middle management.
The fifth stage is Maturity, where the investment starts to reap rewards and a big payback may start to look possible. The founders will be less involved with the day to day running and may start to feel dissociated from each other and the business.
The two friends may be going on this journey at different speeds, but both need to be very clear on which stage the business is at and remain aligned on their respective roles.
4. Calibrate your relationship
This is a relationship that must be nurtured otherwise both of you and the business will suffer. On a regular basis you should calibrate, out of 10, each of the 6 elements of The Relationship Paradigm:
- Are you both able to express how you are feeling and be truly listened to?
- Are there any elephants in the room that you have been unable to discuss?
- How connected do you feel with each other?
- Is the friendship as strong as it used to be?
- Are you equally committed to the success of the business?
- Are you wanting each other to be happy and fulfilled too?
- When did the two of you last have fun together?
- Are you so focused on work that this is a distant memory?
- Are the ‘you’ and ‘me’ both growing as individuals?
- Is the ‘us’ of the two friends growing and thriving?
- Do you trust each other implicitly?
- Can you rely on them to be there for you?
If the scores for any of these is less than 8, there is real attention needed otherwise you will start to drift apart.
5. Have honest and open conversations
Differences of opinion are inevitable and a good thing if they create healthy conflict that is dealt with. If matters are swept under the carpet, they will fester and become toxic. So often business partners drift apart because feelings are not expressed, and resentment grows. A great idea is to schedule a weekly ‘state of the union’ meeting where you devote an hour to sharing three things that have gone well in your business relationship that week and one thing that could be even better. This gives you both time to focus on your relationship, rather than the business, have the glow of positive affirmations, and to deal with problems before they become big issues.
6. Have a ‘what if’ plan
As that underrated philosopher, Mike Tyson, said:
“Everybody has a plan until they get punched in the mouth.”
Many successful partnerships and friendships have foundered because of a metaphorical punch in the mouth. Early on in the development of the business, it is really important to get a written agreement on the ‘what ifs.’ These can be filed away and forgotten until the unlikely but almost inevitable happens.
About the author: Neil Wilkie is a Business Leader, Relationship Expert, Psychotherapist, author of the Relationship Paradigm Series of Books and creator of The Relationship Paradigm®