Part 1 of 2
From professionals wanting to open a new business with their friends or family, to existing partnerships that have gotten difficult and not working out as planned, and everything in-between.
Whether you’re considering entering a new partnership, or managing an existing one, partnership relationships (like all others) take work. In this article we’ll break down the best ways to lead you to success and clean up the mess when it’s no longer working out and you need to part ways.
A lot of fitness business partnerships start out with friends who share a passion for fitness decide ‘let’s go into business together!’.
In the beginning it sounds like a great idea. If you can share resources, complement each other’s strengths, and share the workload as you grow together, everybody wins.
But partnerships can also come with a lot of challenges that too many people choose to ignore addressing until things get difficult and by then things only gets tougher to navigate.
And when something as personal as a business and your incomes are at stake, you can’t just walk away easily when things get tough.
Here are just a few of the top challenges partners struggle with alignment (and misalignment) on:
Values and mission:
What do you stand for? What fires you up and why are you excited about starting and growing a business?
Vision (personal and business):
Where do you want to be personally and professionally in 1 year, 3 years, 5 years and 10 years?
Work ethic:
People may use the same words when they say “hard work,” but they may mean very different things, including things like hours (time), intensity of focus and effort, and detail orientation.
Attitude towards investment (and re-investment) in business growth:
As revenue comes in, do you share the same attitude on re-investment in the business tied to your vision and growth strategy? Growing businesses are like babies. They always want fed, but with cash!
Expectations on personal income:
Also tied to re-investment is your attitude and expectations around personal salaries and distributions. Are you aligned in your expectations? Are those expectations tied to a financial plan and budget that is practical for the business?
Roles and responsibilities:
Who does X? Who does Y? Ownership roles are very different from operational roles, and not all roles have (nor should always have) the same value to the business. It’s critical you clarify who does what, but watch out for assumptions and communication gaps. Issues of control and boundaries, as well as issues of personal responsibility can crop up.
Operational decisions:
If a key decision has to be made about running the business (an investment or purchase, etc.) and there is a disagreement? Who makes the final call?
Exit strategy:
One partner wants out or to take a deal, the other partner doesn’t. When are you willing to exit and why? Have you discussed it beforehand? How will a split decision be handled?
If you’ve read the list above and are thinking, “Wow! That’s a lot to think about!”, you’re right. Better to think about it (and have a plan) beforehand than discover halfway through you want to pull the ripcord (or worse, feel like you have no clear strategy and plan and you’re TRAPPED and can’t!) in a business partnership that has gone sour.
So let’s start with the first, big question:
What are the advantages of having a partner?
You’re not alone “at the top.” Business is tough and surrounding yourself with others that can complement your strengths and weaknesses, and help fuel your passion, can be a tremendous catalyst for growth and success.
Having a partner involved in the operations of the business with you means you also don’t have to make every major decision (and take all the risk) by yourself.
You may have complementary skill sets. Some may be better at executive work and another at programming. Some may be better at sales and marketing, and others love coaching clients and managing staff.
Sometimes, more is just more. More hands lighten the workload and allow for faster growth opportunities. Particularly when you’re starting out.
What are the disadvantages?
It’s the flip side of “You’re not alone.” Depending on the structure of your relationship, you can’t just run your own show every step of the way. You have to coordinate decision-making and strategy. You and your partner may not align on priorities.
You may have different visions, even if you started out wanting the same things. As your business (and personal life) evolves, changes, and grows, you may see the way forward very differently.
On the finance side, you may have different thresholds for financial pain and different risk tolerances. If one person has a family dependent on the income, and the other just has to simply cover their own cost of living expenses, those are very different scenarios. Opportunities (and differences) may arise and it isn’t always easy to agree on a path to pursue.
What makes a good partner?
Relationships work best and last longer when you share values. Your best alignment with a business occurs when both partners know and share the same values, and are also aligned on the “big picture”: Meaning both partners have shared vision, goals, purpose, and mission.
Relationships also work best when there are complementary skills. You both bring strengths to the table that make the entire organisation stronger. Ideally, this will create ‘synergy’. Great players make the players around them better.
Great communication skills are a must. Do both partners make the effort to communicate with one another or do things fall into “assumptive thinking” and hope for the best?
Emotional intelligence is also crucial. When present in both partners, self-awareness, self-regulation, internal motivation, empathy, and people skills allow conflicts to be avoided and resolved, and for the partners to gain momentum in the business.
Both partners also want to manage agreements more than expectations. Expectations, when unstated, are the killer. They generate powerful emotions. “I just expected when we could take a 7-figure exit, we’d take it.” It’s easier to manage an agreement than an expectation. Agreements are not emotional.
If you are creating a new partnership then take the time (and be patient) with establishing a shareholders agreement (and if appropriate a separate operating agreement) that clarifies how key decisions are made, conflicts resolved, and how an exit (or death) of a partner will be handled. While these are uncomfortable conversations, they are never easier to address than BEFORE they need to occur when a conflict arises…
PART 2 of Partnerships: The Good, The Bad & The Ugly is coming soon…
Article written by Sean Greeley for the What’s New in Fitness Summer 2019 Edition.