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Home > Rules Of Engagement: 10 Things To Know Before You Take On a Business Partner

Rules Of Engagement: 10 Things To Know Before You Take On a Business Partner

January 29th, 2008 · No Comments

by Michele Shapiro
 FA - Shaking hands
Movie producer Nancy Juvonen met Drew Barrymore on the set of Mad Love in 1993 when she was visiting her brother, one of the film’s production assistants. Soon after Juvonen returned home to San Francisco, she got a call from Barrymore daring her to move to Los Angeles and become her partner in Flower Films. Juvonen thought it through and decided to take the risk. Now, more than a decade later, she and Barrymore are a true force in Hollywood, producing the blockbuster Charlie’s Angels movies as well as Ever After: A Cinderella Story and the upcoming He’s Just Not That Into You, starring Jennifer Aniston and Ben Affleck.

But business partnerships don’t always live happily ever after. Like a marriage, they require constant work, mutual respect, and an iron-clad agreement (similar to a pre-nup) that covers both parties in case of a split.

If you’re in business already and are thinking of taking on a partner, or if you have a great idea and feel that you need another brilliant mind to help get it off the ground, check out the advice below from those who’ve been there, done that and may (or may not) do it again.

1. Know thyself. Few think of soul-searching as the first step to take when forming a business partnership, but you really need to map out your own priorities before involving someone else in the equation. “In partnerships, you’ve got to know what matters most to you—whether it’s salary, title, or what kinds of clients you want to take on,” said Hilary Laffer, a Los Angeles-based attorney who mediates disputes between business partners. She suggests making a list of your priorities, from most to least important. “Then, when evaluating a potential partner, decide which of these points is negotiable, and which is not.”

2. Partner for all the right reasons. “The most common mistake people make is taking on a partner for the wrong reasons,” said Sarah Shaw, the founder of online home accessories haven Simply Sarah (Simplysarahshaw.com), who admits that she’s been burned by a few bad partnerships. “The main reason is that you don’t want to do it alone, even though you know you’re capable of doing it yourself.”

Beth Schoenfeldt, co-founder of Ladies Who Launch, let fear drive her when she took on a partner in 2002 to start a now-defunct company called FLOinc. “I was so scared to start my own business that I jumped into a partnership. Meanwhile, I was bringing all the ideas and clients to the table. It didn’t even last six months.” Fortunately, Schoenfeldt kept the faith, because today she has a partnership—with Ladies Who Launch co-founder Victoria Colligan—that works. “You have to be willing to do it on your own,” Schoenfeldt said. “People, especially women, are looking to be saved sometimes, and that’s just a recipe for disaster. Instead, ask yourself why you’re looking for a partner. Can this person bring something to the table that you can’t? That’s a better reason for joining forces than just being scared.”

3. Spell out your job d-e-s-c-r-i-p-t-i-o-n-s. When it comes to divvying up job duties with a partner, you can’t be too specific. Regina Furphy of Fishkill, New York, started her business, Gourmetibles, with her sister. Furphy considers partnering with a family member “a wonderful idea,” since you know that person will always be there for you. However, the two never designated clear roles. “This has caused a great deal of stress and inefficiency,” she said. “We often end up doing jobs together, which is a time waster, when each of us could be doing something separately to move the business forward.”

4. Find someone who shares your vision … Before Juvonen accepted Barrymore’s invitation to help launch Flower Films, she made sure they were compatible. “Our first goal was that we shared the same vision,” Juvonen said. “It’s important that we were looking for the same kinds of stories to tell and similar ways to tell them. We don’t always have to be on the same page, but we have to be in the same book.”

5. … But not necessarily your skill set. The major thing Juvonen and Barrymore have working in their favor is that they each possess different strengths. “I have zero interest in acting,” Juvonen explained. “I never auditioned for a school play and often feign illness when I’m asked to speak in public.” Juvonen now spends 17-hour days managing the production of He’s Just Not That Into You while Barrymore shoots Grey Gardens (in which she plays Little Edie). “We don’t want to do what the other’s doing. We respect and admire it, and gladly hand it over to the other.”

Although it’s important to know your strengths, you may also discover some that even you didn’t know you possessed. When Christy Turlington Burns launched her Sundari skin-care line in 1999 with two partners who both had Harvard MBAs, she thought their business savvy would help balance her creativity and years of experience in the fashion world. “Initially, I thought they had so much more experience than I did,” Turlington Burns said. “But actually, I did have a sense of how to sell and market that I didn’t even know I had until that point.”

6. Are your work ethics on par? Shannon Ritter and Josephine Pfeiffer opened Fleur de Lys (Fleurdelysus.us), a home furnishings and accessories store in Costa Mesa, California, three years ago. So far, business is thriving—and so is their partnership. It helps that the two women, who had worked together at Saks Fifth Avenue before starting their own business, knew how the other operated. “Understanding each other’s work ethic is very important,” Pfeiffer said. Ritter added that, if she were to take on a partner she didn’t know, she’d ask, “‘What’s your idea of a workday? Will you go home at six?’ With Josephine, we’ll both work until the job is done.” When it comes to knowing about your partner’s work ethic, lifestyle, and background, you can’t ask too many questions ahead of time.

7. Speak your mind. Good and constant communication is key, even when it’s not comfortable. “It’s easy to support each other and pat each other on the back,” Juvonen said. “But when things get rough, and they do because it’s a relationship, you need to find a way to communicate issues with the other.” Juvonen says that she and Barrymore often avoid pouring fuel on the fire by writing letters—rather than confronting each other face-to-face. “No yelling, no interruptions, no saying it the wrong way,” she said. “You write a letter and read it carefully before you send it. Take away any accusation or anger. Create solutions and take responsibility for your part.”

8. Have an exit strategy. Giving everyone a graceful way out is a great way to begin a partnership. Michigan-based Gretchen Hopp Doyle of Baker-Hopp & Associates discovered this firsthand when she purchased her family’s insurance agency in January 2006. She took on a 50/50 partner, but not before hammering out a detailed partnership agreement. “We went through grueling hours with a top-notch attorney who required us to imagine the worst-case scenarios,” she said. “Although it was a painful process at the time, we got it all down on paper and now we do not worry about worst-case scenarios. We simply focus on growing our business.”

9. Test the waters first. Lisa Metcalfe of Oli & Lina LLC, which brings contemporary sportswear to women via home shopping events, consulted for her current partner, Rene Chrison, for seven months before Rene realized that she needed a partner to turn her business into a multimillion-dollar operation. “When we were introduced by a mutual friend, we hit it off immediately,” Metcalfe said. “So we tried each other out for several months and both realized that a partnership was inevitable.”

10. Keep your eyes on the prize. “People often lose sight of objectives and tend to get bogged down in the most minute details,” lawyer Hilary Laffer said. You have to keep your goals and objectives in mind, and steer clear of personal attacks. “They can kill a partnership,” she added. “Lots of times people keep their feelings bottled up inside. Then it gets really ugly.” Remembering what it is you’ve set out to achieve will help keep the drama to a minimum.