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Learning The Hard Way That Partners Can Hurt You

Some ideas need a partner to get them off the ground. But picking the wrong one spells disaster. Here's one account of how a business owner got back in the saddle after a nightmare experience.

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Some ideas need a partner to get them off the ground. But picking the wrong one spells disaster. Here's one account of how a business owner got back in the saddle after a nightmare experience.

Opinions

Learning The Hard Way That Partners Can Hurt You

Some ideas need a partner to get them off the ground. But picking the wrong one spells disaster. Here's one account of how a business owner got back in the saddle after a nightmare experience.

Share this article

We’ve all had friendships that fizzle, lovers that leave. It’s a part of life. Admittedly, some losses are tougher to get over than others. But time heals. You move on, fate finds new companions, and you wonder why the heartache.

However, the pain that I and my fellow founders felt when we got a business partnership wrong is something I don’t want to repeat, nor would wish on anyone else.

We learnt the hard way that there’s a right way and a disastrous way partnerships can work out. Our company almost hit the wall and the financial and emotional ramifications were great.

Have my time again and these are the five things I would do differently.

Lesson 1. Be very clear about why you need a partner and what they will deliver

We were disruptors to the industry and not being accountants ourselves, we recognised we needed accounting expertise from inside the industry to break in.

After all if you have no experience yet want to become a leader in a field, you need to learn from someone who does. Just like an athlete, you don’t become the fastest without coaching and support from specialists.

However what we didn’t do was identify how the partnership role would function and therefore the traits that person needed to have. They need to ‘get’ the concept, see the vision, yet fundamentally appreciate it’s your idea and it’s their experience and expertise that will get it over the line. Fundamentally, your partner must have a shared purpose and outlook to you.

Just as you want to drive your business on, your partner needs to drive you, and be meticulous in steering you in the right direction. Essentially they need to impart knowledge that will guide you and help you validate your idea technically, but not impede you from innovating. Ours didn’t and the cracks appeared soon into the relationship.

Lesson 2. Find recommendations and date them

It’s a situation that was avoidable had we done more homework. So when you’re in the market for a partner first of all think about who you trust. I mean really trust. They don’t have to be in your industry just someone who has integrity and gravitates to similar people. Who do they know that can help you find the person you are looking for?

Work on the principle that there are six degrees of separation in life and you’ll probably find someone on the doorstep who’s fit for the job. But whatever you do exhaust your possibilities.

boat date

When looking for a partner, it's important to play the field

I say exhaust your possibilities for good reason. You’ll find that there is more than one person who can help. But just like marriage there is one person who will have the spark you need.

In my experience it is very worthwhile ‘dating’ them to find it. Instincts go a long way but check your first impression is valid.

You need to know how they will react in certain situations and that their values match yours. How passionately do they talk about your idea? Are they willing to give you free consultancy to show their commitment? What history do they have and how would this shape your future together?

Lesson 3. Get a good lawyer

This brings me to my next lesson. It’s your idea. Make damn sure you protect it. Have all the IP legalities in place and a contract that gives you the last word.

We agreed to secure our partner with a shareholding in our business. That’s not unusual and was straightforward to put in place. To begin with, their contribution translated to ‘ok’ growth, but we soon realised that their commitment to our disruptive business model wasn’t 100% and this started to undermine how quickly we would grow.

But perhaps the greenest error we made was that when we established we needed to part company, we didn’t have a hard and fast way out of our contract. We were stuck and on realising this the lump in the throat was indescribable. I still shudder when I look back.

In the end it was more luck than judgment that got us out of the mess we were in. This could have been prevented if we’d had a get out clause should their performance not live up to our expectations. Which leads me to my next point.

Lesson 4. Mark out the precise deliverables

We didn’t date for as long as we should have done. We discovered, after it was too late, that they were very good at what they did but they were a traditionalist at heart.

The vision to move to online accountancy started to jar. Our operating costs became too great and we were inefficient. It was clear that the more we grew the less sustainable the business was. Our idea was starting to slip away from us and so was our motivation as the relationship broke down. The idea we believed in so passionately was becoming a noose.

gramophone

Is your prospective partner looking to the future or stuck in the past?

It could have been avoided with a better understanding of what made them tick, but also being very clear up front on the deliverables that affirmed our vision, and linking share ownership to achieving milestones.

Lesson 5. If it goes wrong don’t give up

It took a lot of strength to remind ourselves that the idea was good and fight for it. We didn’t want to go to the wall after the blood, sweat and tears that had gone into it.

So we trusted our instincts and decided to do two things: look for someone with the experience and the vision, and use their skill to help us take the toughest business decision we’ve ever had to make and instigate a buy back.

Our new partner had confidence in our idea, and gave us the confidence to start the negotiation. It took months and broke down time and again. It was very tough, in fact the toughest thing I’ve ever faced in business but our new partner kept us on track and we did succeed in the end.

The new found freedom unleashed a bow wave of energy and enthusiasm. Within 12 months we'd doubled our customer base and four years on our turnover has increased by 16-fold. To top it all, we've just picked up a Queen's Award for Innovation - testament to our innovative business model.

And that’s the bottom line. We always knew it was a good idea but we learnt the hard way a single person can stifle you, and another can help you blossom.

James Poyser is co-founder of inniAccounts.

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Learning The Hard Way That Partners Can Hurt You

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