Sunday, May 31, 2009

The Partnership Paradox: How to Choose a Business Partner

The Partnership Paradox
How to Choose a Partner and Manage the Partnership

Starting your own business is an enormous undertaking. The to-do list seems endless, as does the number of decisions you must make. One of the most critical, strategic decisions you will make is whether to take a partner. This is one of the earliest and most important decisions entrepreneurs face. This choice will have a lasting impact on not only the success of the business, but on your emotional health as well.

Horror stories abound about the partner from hell and about partnerships gone wrong. Deciding whether to take a partner and choosing the right one is a strategic imperative, and if given proper focus and consideration, you can make the right choice, one that can have a profoundly beneficial impact on your business.

Do You Need a Partner?

The first thing to do is assess your situation and decide if you need a partner. Statistically speaking, businesses started by partners do better than businesses started by individuals, but that doesn’t mean your situation warrants or will be benefitted by a partnership.
Sometimes going it alone is the right course of action

There are many benefits to going it alone. First, it certainly is simpler. As president and chief executive, you'd have the authority to make crucial decisions and shape the future of your company without having to reach agreement with another individual or a group. Of course, this can be a good thing or a bad thing, depending on whether you work better as a consensus builder or as a maverick. If you're a sole proprietor you can brainstorm with employees and advisers, but ultimately company decisions and responsibilities will rest on your shoulders.

Second, without a partner, you will own it all. You won’t have to share the business's wealth, rewards or achievements. You will have complete control and complete recognition. Third, you won’t have any emotional ties with anyone and no conflicts or issues (personal or professional) to resolve with a partner. If you have the resources, the experience and the wherewithal, you should seriously consider going it alone.

On the other hand, there are many benefits to forming a partnership, including sharing the financial burden, the responsibilities and work load; benefitting from your partner’s experience, skill set and network; and added capital contributions. With a partner, you share the risk and the rewards, the breaks and the burden.

A partner can also provide valuable psychological, motivational and emotional support during tough business times. You can help each other out, lean on each other and work together to reach a shared goal. Two heads can be better than one.

So, the first step is to get clear on whether you need a partner or not. To do this, ask yourself these questions to assess your situation. Be honest -- there’s a lot at stake:
  • What are my goals?
  • What are my strengths and weaknesses?
  • What are my skill sets?
  • What skills or experience do I need for this business to succeed?
  • What are my financial resources?
  • What do I need to reach my goal, and where/how will I get it?

A critical assessment of what you have, what you need and where you want to go will determine if you can go it alone, if you need to take a partner and what you need to look for in a partner. If all you need is money, find investors or get a loan. If all you need is marketing or web or graphics capabilities, look for a good hire. But if you determine that you can reach your goal best with a partner, go for it.

It’s Like a Marriage, Only with a Bottom Line

In many ways, a business partnership is like a marriage. As with a spouse, you and your business partner are throwing your lots together and working toward a common goal. The qualities of a good marriage are virtually identical to those in a good, productive business partnership. You will likely get out what you put in. A good partnership requires:

A shared vision and goal
Mutual hard work
Open communication
Mutual respect
A balance of power
Effective conflict resolution

Like a marriage, a business partnership is not a decision to take lightly. There is a lot at stake here – money, time, effort, emotions. In addition, you’ll be spending many of your waking hours working with this person, so you’ll have to develop an effective working relationship. Choose well.

The Pitfalls

People make the same mistakes over and over again when choosing a business partner. We choose people either too much like ourselves or we choose people who are so different than ourselves that we are in constant conflict. Oftentimes two people who are technically brilliant start a business but neither has a head for numbers, a knack for rainmaking or any idea how to run a company.

People also rush the decision, which can be catastrophic for your mental and financial health. But perhaps the biggest mistake is not in the choice of partner but in how the partnership is structured and managed. Many partnerships do not get started on the proper, structured footing, with all the roles ad responsibilities spelled out. This is a critical. Partners should agree on the vision and the goal and should know who is doing what, the chain of command, etc. From the beginning.

And now a word about partnering with friends and family. This is rife with danger. Walk this line very, very carefully. Whoever coined the phrase, “It’s not personal, it’s business,” never had a business partner. With partners, it’s almost always personal on some level and at some point in the relationship. And if your partner is a friend or family member, it’s personal from the get-go.

Family and friendship dynamics will always seep in. If and when
something goes awry in the business (and it will), it will affect your relationship. And if something goes wrong in your family or friendship, it will affect your business (and your employees). There is very often little or no separation between family and friendships and the business.

While friends and family are often likely and good candidates for business partners, be aware of and consider the many pitfalls. If your partner is your brother or best friend, it is extremely difficult to keep personal issues out of the business, and business issues out of the personal. This is not to say that it can’t be done, but it is to say that you should be very wary of this approach.

I have seen this work brilliantly and I have seen it end very badly. Personally, I’ve been business partners with family members and friends several times, with varying degrees of success. I lost a very dear friend, who was a business partner at the time, over a business disagreement. On the other hand, I had an immensely fruitful and successful business relationship with my sister for 15 years. What was the difference? Well, I always said it worked because my sister and I had a lifetime of experience fighting and making up! But I think crystal clear goals, expectations and responsibilities helped make our partnership a success. Just be careful.

The How’s of Choosing a Partner

The next step is to choose your partner. In the first section, you determined your goals, analyzed your strengths and weaknesses and determined what you need to reach your goal. Now it’s time to choose a partner. Start by reviewing the answers to the questions you asked in the first section, the ones that assessed your strengths, weaknesses and goals. Now, think about what you need and draw up a set of criteria that you're looking for. You will use these criteria to judge potential partners later. The criteria must include a person’s:

  • Skills
  • Experience
  • Network
  • Financial investment potential or stability
  • Personality
  • Relationship needs

Ask yourself:
  • Is there someone who can help me reach my goals?
  • What are his or her strengths and weaknesses?
  • What does/doesn’t he/she bring to the table?
  • Do we have the same value system?
  • What is his/her work ethic?
  • Will she/he complement, duplicate or hinder me?

Think about the criteria and the questions carefully. The goal is to choose a partner who complements your skills, not duplicates them. For example, if you are terrible at sales, then you should focus on someone for whom sales is a strong suit.

Think about the personality traits you can and can't work with
This requires you being really honest about who you are and what you bring to the table. Are you a control freak? If so, be honest about it and pick someone who isn’t a control freak! Two control freaks may not work well together. Similarly, are you a big picture/pie-in-the-sky type? Then you might want to pick somebody more detail-oriented and grounded. Are you a fast decision maker or do you like to think, think, think? Picking someone who is a slow decision maker might be a good thing or it might drive you crazy.

Also, what kind of relationship or psychological support do you need in the relationship? Do you want someone who is warm and nurturing? Do you want someone who is all business? Determine what type of person you want to work with and go from there.

Most importantly, pick someone who is as excited and as driven as you are to make this business idea a success. And pick someone whose work ethic matches your own. Find out early on whether your partner thinks a six-day workweek is to short or likes to punch out on Thursday and breeze back in on Monday.

Who NOT to Pick

Just as there are many qualities to look for in a partner, there are some obvious and not so obvious red flags, too.

First and foremost look at the person’s finances. You may not need a partner who brings any investment to the table, but you do not want to choose someone who is financially unstable. This is harsh but true: financial troubles often indicate a person who lacks discretion, self-control and good judgment. Running a business requires careful and sound financial decision making, and someone who has shown a lack of this in their personal life may not be the best choice for a business partner. Your partner doesn’t have to be a millionaire or possess MBA-type skills, but he or she does have to be financially mature and responsible. Furthermore, it may be some time before your new venture makes money, and if your partner comes into it desperate, it won’t be a good working relationship.

Second, pick someone who is mature and stable. Avoid people who are flaky or skittish or who have a history of flakiness. How can you tell? Well, have they had problems committing to other jobs or projects? Do they have a good reputation or a bad one? Can they commit and stick to your new venture?

Along those same lines, pick someone for whom drama is something they watch on TV, not a mantra for their personal lives. We all know people who thrive on drama. They should not be your partner. Also avoid people with a lot of personal baggage. Starting and running a business requires 100 percent of your attention. If someone is a drama king or queen, or who is distracted by their personal life, they will detract from your success. Avoid choosing them.

How about a maverick? Well, mavericks tend to be confident, self assured and energetic. But mavericks can also be a problem. They often shoot from the hip, don’t think things through and, by their very nature, are not good collaborators (that’s why they are mavericks). Tread lightly. I personally would never choose a maverick as a business partner.

Other red flags to seriously consider include if the person doesn’t listen well; doesn’t have strong emotional intelligence; has poor morals or ethical standards; doesn’t play well with others; doesn’t have a strong network or networking skills; has legal or emotional problems; is boastful or otherwise full of himself. These and any quality that rubs you the wrong way are all red flags. Pay attention to them because the problems that nag at the back of your mind now will be magnified 100 fold when that person becomes your partner.

Put a Ring on It

Or, in this case, legalize it. You’ve found a business partner you know and respect and you want to start a business together. Great. Now put everything in writing. Don’t be complacent or lulled into thinking that nothing could go wrong, that a handshake and mutual respect will be enough for your partnership. This is business; you need legal documents that spell everything out and that protect you and your partner from each other and the vagaries of business.

Luckily, none of these documents is rare or unusual. They are standard documents that can be procured on-line and customized or may be drafted for a nominal fee from any corporate lawyer.

First and foremost, you need a partnership agreement. This is a document that spells out the partnership and includes everything from how you’ll raise money to how you’ll divide responsibilities. It usually includes a buy-sell agreement, which spells out who can sell what and to whom, if one partner is given first right of refusal for the other’s shares. Etc. The agreement also often includes a non-compete agreement in case one partner leaves. Partnership agreements can and should also spell out bonuses, benefits, perqs, sick-time, continuing education, profit taking, what happens if a partner dies, voting rights, shares and sweat equity, etc.

There are many, many things to think about and as much of it as possible should be spelled out in your partnership agreement. You need to put it in writing. Discussing it and agreeing to terms is not enough; your agreement and partnership must be formalized in a legal document. I cannot stress this enough. Don’t skip this because you are friends or afraid of hurting someone’s feelings. This is business. Put it in writing. You must try to consider everything – especially the worst-case scenario – and cover it. It is money well spent to hire an experienced corporate attorney to draft an agreement for you.

Remember, a partnership can be the foundation of your business or it can be your complete undoing. But if you assess strategically, choose wisely, and manage effectively, your partnership can be the cornerstone of your business, and of your success.

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Thursday, May 21, 2009

How to Simplify Your Work Life

Simplifying Your Work Life

Today’s workplace can feel like a constant assault on the senses. Think of all the tasks confronting you during a typical workday: emails, texts, phone calls, messages, answering questions from team members barging into your workspace, and so on. And that's before you even begin to tackle actual work. It’s enough to make your head spin. But you can master your work life, your workload and your work environment with a few simple strategies.

The Blackberry Jungle

For many reasons, today’s workers are far more stressed than ever before. Long commutes, more work, longer hours and new technologies all conspire to make us stressed and overwhelmed. Despite promises to the contrary, modern technology has actually increased the amount of work we have and do, and it reaches us 24-7. Think about how much more is done electronically, and how many more interactions you have on a daily basis because of technology. Blackberries (or the equivalent) at the ready, we are all barraged with a constant stream of texts, tweets, e-mails and messages. It’s more work, it’s more immediate and it never ends.

Six months ago, everyone talked about how to achieve “work-life balance.” But today, with a faltering economy and unemployment nearing 10 percent, it is increasingly hard to talk about work-life balance when there are millions of people who would give their right arm to have a job and the problem of balancing their work and their lives.

But that doesn’t change the fact that workers are still stressed and overwhelmed at work. Many people are overloaded by technology and by the environment in which they work. And it is causing an unhealthy imbalance in the working lives of many, both on the job and off. You do need to simplify your working life, not just to find balance, but also to do a better job. You may need to simply your working life if:
  • You feel completely stressed at work
  • You feel overwhelmed with too much on your plate
  • Your productivity is decreasing due to an inability to handle your projects
  • No matter how many hours you put in, you don’t seem to get out from under your pile of projects
  • You find yourself spending too much time on things that just aren’t priorities

But there are simple ways to simplify. Here’s how.

First, create space. Studies show that your physical environment has enormous impact on your wellbeing, productivity and intellectual abilities. Your workspace should work for you, not against, and this is why this is a perfect place to start. The very first thing to do is to simply your work environment. Think of it as spring cleaning – get rid of the clutter, organize your workspace and jettison things that are distracting you. Not only will simplifying your workspace help you become more productive, it will also provide a powerful psychological support system for keeping your work life simplified. Very often, clutter begets clutter, in your organizational skills and in your thinking. So, by clearing out the clutter, you will be less distracted and more focused. This is a good place to start, in large measure because you will see results immediately.

The key to simplifying your workspace is to streamline, edit and minimize. Your workspace should be as minimal and efficient as possible. It should have few distractions and no clutter. Look around your workspace:
  • How many things are on your desk?
  • How many things are on the walls of your office or cubicle?
  • How cluttered is your computer desktop?
  • Are there piles of things on your desk or your floor?
If you have a lot of clutter, chances are it is creating or contributing to inefficiencies and distractions in your work life. The key is to create a clutter-free distraction-free, stress-free and productive workspace. First, organize your computer desktop. Move things off that do not need your attention. Too many files on your desktop are visually confusing and a sign of poor organization. Only keep on your computer desktop the files you are using that day or need the most. Move the rest off. And organize them while you’re at it.

Next edit your walls and the surface of your desk. Does all that stuff really need to be there? Yes, you want a few personal and inspirational items, but you only need a few. Pick two and get rid of the rest. What papers or files are on your desk? Decide what you need and file the rest away. They will be close at hand if you need them, but they don’t need to be on your desk, do they? Also, organize your tools. Do you really need a stapler, tape and paper clips on your desk? Put them in a drawer. Move as much as you can off your desk. Keep only the things you absolutely need in front of you, and a personal item or two. That’s it. Put the rest away.

Now, Prioritize Your Work

Once you have streamlined your work environment, you can get back to work. And you must start by prioritizing your workload. Setting priorities is absolutely essential when you have too much on your plate. Look at all your projects and determine the method of prioritization. If you are self-employed, use whatever system aligns with your business. For example, most of my work is based on a deliverable – facilitating a conference, a meeting or a workshop; delivering a keynote address; etc. So due dates are my big thing, and I prioritize my workload based on due date of the deliverable and the amount of time each project will take. Many projects have more immediate dates, but don’t require much work, so my priority list isn’t always in order of due date. I also reevaluate the list often.

If you work in an organization, your supervisor or manager should direct or help you prioritize your workload. You should meet with them to go over your projects and find out what the company or department’s priorities are. When a new project is assigned you should bring up existing projects, go over your workload and reevaluate all of your priories. You should always, always have a clear understanding of this, and you must work with your manager to stay clear on your priorities. People who are afraid to have this conversation with their supervisors are not going to be able to simplify their work life.

And it’s a simple conversation, not a complaint that you can’t get something done or a demand that they give you less work. What you are doing is asking for clarity. Make a list of your projects or workload, go in to see your supervisor and simply say, “I have a lot of going on right now and I would like to go over everything with you so that I am sure I have my projects prioritized properly to meet your expectations.”

You also need to fully understand the project in order to understand the amount of time it will take to deliver. You cannot accurately and effectively prioritize unless you have a clear idea of how long the project will take. As a consultant, I see many people who complain that they are unclear about priorities but, in fact, the real problem is that they failed to correctly assess the amount of time required to complete a project or the importance of the project, and then they are in a constant state of crisis. Make sure you understand the project, how long it will take and then and make sure you understand where it falls on your manager’s priority list.

The Technology Trap

If technology is supposed to make our lives so much simpler, how come we are all working more? And how come we are plugged in all the time? Well, you don’t have to be. Like the clutter on your desk, you have to be judicious about the type of technology you use and how and when you use it. You can simplify here, too.

The first thing to do is take a good hard look at the different technologies you utilize to complete your work. Now, ask yourself this simple question: does this make my work life easier or more difficult? Does it save me time or does it take longer? Which technologies make your work life simpler, more efficient and more effective and which ones actually make it harder or take up too much of your time unnecessarily? For example, is your new PDA really making your life simpler or is it adding a new level of unnecessary complexity? Ask yourself, do I really need to text, e-mail or call John in accounting? Can I walk down the hall and ask him the question? Do I need to start what could be an endless and unnecessary stream of electronic messages when I could have my answer in a minute with a little physical effort or a phone call?

There is a mini backlash going on right now, where people are forgoing fancy tech gadgets for old-fashioned methods – like getting up from their desks and meeting people face to face, keeping day timers, using Rolodexes and index cards, keeping to do lists on notepads, using the telephone, etc. The problem with technology is that you fall into a trap of relying on it for things that may be better and more efficiently handled the old-fashioned way. Decide what actually works for you, and use it. Lose the rest.

Personal Strategies

In terms of your physical work habits, the most important way to begin to simplify your work life is to be realistic about what you can accomplish, both in terms of time and skills. You must know what is important and what isn’t. Then, focus on what is important and let go of the rest.

You also need to learn to say no. If you are completely swamped, say so. Perhaps you can renegotiate the projects you already have or get someone to help with your workload. Just don’t be afraid to say no, whether it’s at work or at home. Be wary about making promises. It is easier and far better to say no at the beginning than to get out of an agreement later.

When you do have a project, seek clarity on assignments and expectations. Find out exactly what they expect from you and what will satisfy their requirements. These are called the conditions of satisfaction, and you should understand them from the beginning.

If you are working with others on a project, you have to determine who is the point person, and if no one wants to take charge, think about stepping up to the plate. Everyone should be on the same page, in terms of what the project is, what the conditions of satisfaction are, who is doing what and when, and when the project is due. Make sure you and others on the team are crystal clear about timelines, expectations, and the criteria for success and completion. In order to succeed and work effectively, you have to be able to communicate properly with each other. And if you have a problem with a member of the team, don’t go over their head. First, talk to them about what you see as the problem.

By simplifying your work life with these strategies, you can be far more productive and much less stressed at work. Start small – maybe start by cleaning off your desk and organizing your computer desktop. Then build to a point where you can prioritize your projects and work on them with focus and clarity. Minimize distractions – physical, visual, technological. By simplifying your work life, you will increase your productivity. And your sanity.

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