Choose Your Business Partner Wisely...

William Shakespeare wrote in The Tempest, “Misery acquaints a man with strange bedfellows.” This line is spoken by a man who has been shipwrecked and finds himself seeking shelter beside a sleeping monster. Today, it has come to mean that difficult circumstances will unite very different people.

Starting a business is a stressful endeavor under the best of circumstances. Often, when a person decides to do so, there have been conversations with significant others and friends about an idea. These conversations can give substance and perspective to an idea to be pursued or rejected.  

It's common to see individuals in this collaborative mode start a business venture with a trusted friend or a supportive acquaintance. However, this seemingly ideal situation can often lead to unexpected challenges and may not always be the best fit for the business environment they’ve created. 

I’ve often cautioned new startup founders: "Think before you get into business with someone who drinks the same booze and laughs at the same jokes. You may find yourselves making the same kinds of misguided business decisions and not realizing it until it’s too late.” I’ve seen this happen with several clients.

Case Study:  In one case, a specialized auto repair business co-owned by two family members with two employees was doing fine for a couple of years. They suddenly found themselves in a cash flow crisis, unable to pay recurring expenses, and laid off the employees. 

But it wasn’t difficult to identify the cause of their dilemma.

Usually, there was cash in the drawer. Unfortunately, they were in the habit of dipping into the cash to pay themselves however much they wanted whenever they needed it. They both lacked the understanding of cash flow management or the discipline to prioritize keeping the business healthy day to day. When there was a slowdown in business, they took less.

Then, one day, the drawer was empty. 

Unfortunately, they waited too long to fix the problem. By the time I got involved, vendors were clamoring, utilities were unpaid, and their families struggled to survive. Under the circumstances, efforts to secure terms from vendors, loans from banks, or investments from friends and family were fruitless. A viable business shuts its doors due to a shared lack of financial discipline. 

While this is a simple example of bad partners, it represents a scenario repeated in growing businesses. Disasters can also happen when married or partnered people share a business venture. It takes a strong relationship to work together, make business decisions side-by-side, and share their personal lives. When compatibility is there (the exception), the results can be profound—a perfect team. If not, the business, relationship, or both can suffer irreparable damage.

Learn, Think, and Execute to your success – in business and in life.

Tom

P.S. Do you have a question or issue you want me to write about? Let me know in an email to [email protected].

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