The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are the benefits of starting a company with a partner?” is written by David Nilssen, CEO and co-founder of Guidant Financial.
Choosing to work with a business partner shouldn’t be taken lightly. Owning a business can be a deeply personal experience, and for entrepreneurs who have a specific vision and enjoy being in the driver’s seat, having a partner may not be the right choice. But for me, it has been greatly beneficial, not only for my company, but for my personal growth as a leader.
The best piece of advice I can give is to treat a business partnership like you would a marriage. You want to choose someone who balances out your strengths and weaknesses, someone you trust and respect, and ultimately, someone with whom you want to share both the positives and negatives of owning a business. Here are a few considerations to keep in mind:
Partner to balance your strengths
When choosing a partner, it’s important to find someone who balances out your strengths. Every high-performing team has a producer, innovator, stabilizer, and unifier—all necessary for the business to thrive. Most people only shine in two of these four areas, so by finding a balance of all four between yourself and your partner, you can ensure your team can handle anything that comes your way and excel at doing so.
In general, I have a great vision for where we can take Guidant Financial. I can see how, by leveraging technology and services, we can help more entrepreneurs find funding to start or buy a business. I know why we do what we do and where we want to go. But, defining how we get there and when particular projects should start is not my greatest strength. But it is my partner’s. He’s unique in his ability to see the big picture and break it down into digestible compartments/projects—helping us eat the elephant “one bite at a time.” That balance in our strengths has helped us go further faster.
Partner because you can’t afford to hire
In many successful partnerships, I’ve seen the technical “founder” partner with someone because they couldn’t afford to hire them. In this case, equity in the business and partner status provided enough value to attract the outside individual to join the team, allowing them to work together without overspending.
Partner to challenge yourself
I also believe it’s key to find a partner you want to “battle with”—someone who will challenge you and who will add unique value. They say it’s lonely at the top, and when you’re running a business by yourself, it’s very easy to think single-mindedly. However, partnering with someone who pushes you and challenges you to think differently will help keep the business moving in the right direction.
Invest in your personal relationship
Business partners spend so much time working together intimately that it’s also important to nurture your personal relationship. It’s easy to get distracted by the business and grow apart. Invest in the relationship to keep it aligned, and your business values will follow suit. I strongly encourage working with a business coach for support.
Make a contract
Avoid being 50-50 ownership partners whenever possible. At the end of the day, there needs to be one final decision maker. Very few partnerships can survive the complexities of having equal shareholders in the business at the same time.
Let’s say one of you wants to raise prices or acquire a company. Unless there is consensus, a 50-50 partnership could result in a stalemate, meaning no decision gets made. This can lead to resentments that can become corrosive to the partners.
It’s also important to have a partnership agreement from the get-go. It’s much easier to define early on how you’ll separate, should you need to. I’ve seen friendships blow up, businesses hurt, and families impacted by not having a business “prenup” in place. My partner and I have one in place, and we both believe it’s necessary.
Ultimately, having the right partner can be the reason your business succeeds. Spend the right amount of time deciding who you want to team up with and how you can keep your partnership healthy. I’ve been lucky enough to partner with someone I also call a friend, and as our business has grown, so have our families. By supporting each other personally and in business, we’re also able to enjoy the real reason we go to work each day.