The First Rule of Partnerships

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Rule of Partnerships

When people think of business partnerships, they usually think about two or more people getting together to launch a venture. While that is true, it may also be true that a far more common type of partnership these days is the strategic partnership where two companies work together for a common purpose, usually for a limited amount of time.

That bad partnership almost ruined both companies…

Strategic partnerships are incredibly useful when done right, because they allow businesses to combine forces, geometrically expand their reach, and often cut costs at the same time. But when done wrong – watch out! Remember the ill-fated merging of AOL and Time-Warner back in the day? That bad partnership almost ruined both companies.

In the small business world, a far more common experience is one not unlike the tale of Marty and Phil who met soon after college while both were working at a furniture store. Phil sold carpet and Marty handled advertising. They hit it off famously and before long started talking about going into business together. Marty had always dreamed of being an entrepreneur and Phil learned that he did not want to work for someone else, either.

So they scraped together a little money, rented a 900 square foot space, and opened their own carpet store, their dream.

They were a great team. Phil knew carpet, and Marty knew marketing, and before long, that one store multiplied, becoming two, then four, and then eight. As the years went by, they grew the chain to 17 stores. While they were successful, they also found that after many years together, they simply did not see eye to eye any longer. Marty had become more manager than entrepreneur and did not like that. Phil had his own gripes. They grew tired and weary of one another.

So, after many great years together, the once best friends decided that one of them had to go. After much bickering, Marty eventually sold his share of the business to Phil and used the proceeds to open a single giant carpet warehouse where he was the only boss and entrepreneur. He loved that. Phil went on to run the chain, and he loved that.

They never spoke again.

So yes, partnerships can be great, and they can also be terrible. Care has to be taken before entering into any sort of partnership, strategic or otherwise, because your partner can hurt your brand and cost you business if you choose unwisely. Of course, there is no way to know if the relationship will work out (or not) 15 years down the road, but you can lessen the likelihood of making a mistake if you just remember this one simple rule:

Date before you get married.

Do a project or two together first. See if you are compatible. Do you have the same goals and work ethic? If so, go for it, and if not, you will be happy you never made a long-term commitment.