I believe a well-structured partnership where the partners fit together will have a greater chance of success and a higher degree of success than a sole owner business. Do the names of Gates & Allen, Jobs & Wosniac, Hewlett & Packard, Disney & Disney, and Page & Brin sound familiar. They are all the originating partners of Microsoft, Apple, HP, Disney, and Google. These businesses were started from nothing and became resounding successes because they were well-structured and well fitting partnerships.

Conversely, poorly structured and ill-fitting partnerships will almost certainly cause the ultimate demise of the partnership. We will focus on the key ingredients needed to structure any partnership to success.

Key #1 The partnership must have a value providing purpose. Businesses (and partnerships) must be formed with the purpose of generating value into the world to create the conditions where people buy the value created. Creating a business just to make money, rarely, if ever works. This vision must be clear, direct, and documented. It must generate positive value producing results

Key #2 All of the partners must voluntarily agree with and endorse the purposes of the business. All of the partners must be focused on the same destination for the same reasons. Otherwise, misdirected partners will create conflicts and will counter or negate the efforts of others. It’s like having three oarsmen rowing in one direction and one rowing in the opposite direction. When all of the oarsmen row in the same direction growth and success occurs.

Key #3 One partner must have ultimate control to make final decisions that cannot be overturned. If there is a possibility to contest a final decision like in 50%-50% or 33%-33%-34% partnerships, then human nature will ultimately cause conflicts to occur that cannot be resolved, except by dismantling the partnership. All partners must agree and accept that ONE partner has the power to make final decisions for the business. By doing so, the conflicts are resolved before they grow to become partnership destructive. This is an extremely important ingredient and the lack of this final control has allowed conflicts to fester and destroy some otherwise very successful partnerships. Partnerships by committee create politics, which create personal agendas, which divert from the purposes of the partnership, which split partnerships.

Key #4 The one partner with the final decision powers is normally the partner who was chosen by the other partners to be the leader of the business. Having one leader partner makes it easy for all partners, including the leader. Normally this is the partner who came up with the vision or purpose of the business and recruited other partners to join. But it does not have to be. The key is that the partners designate the leader.

Key #5 The partners must be different from each other. There are three functions of a business that must be completed for the business to succeed. Michael Gerber wrote that they were the three skills of an entrepreneur. These three functions are:
The Visionary function
The Management function
The Technical function

The Technical Function
The Technical function of a business requires someone to actually perform the duties of that business which attracts payments. This could include repairing an air conditioner, extracting a tooth, painting a house, writing a computer program, or installing a sink. People who do this type of work have almost total control over what they are doing, they actually do something tangible, and they receive almost instant feedback and gratification. This is the “doing function.”

The Managerial Function
The Managerial function of a business requires someone to manage, coordinate, and organize themselves, time, things, concepts, and the business activities of other people to achieve the daily and weekly success goals. People who do this type of work have much less control because of reliance on others to actually perform the technical parts and they have delayed gratification of about one day to a week.

The Visionary Function
The Visionary function of a business requires someone to look years into the future, set goals for the business and organize the business, so that current activities will contribute to the completion of these goals. People who do this type of work must rely on others to actually perform the managerial and technical parts and are susceptible to the many unforeseen things that will happen during the years. They perform even less, if any, “doing” type of work, and have delayed gratification and feedback of about one to five years.

The success of a business will rarely exceed the level of poorest execution of the three functions. For example, if the Technical and Visionary functions are completed at an excellent level, but the Management function is completed at a poor level, the business success will rarely rise above the poor (Management) level.

The business is limited to the lowest level at which these three functions are performed, but one person (the entrepreneur) cannot perform all three functions simultaneously for any length of time, at even medium levels. Hence, businesses where the entrepreneur must personally exercise all three functions will rarely succeed.

But with partnerships, one person will not have to perform all three functions. Instead, the partners can and will want to divide the functions among themselves so the right partner is performing in the right function to a much greater success level. Thus, all three functions of the business can be completed at very high success levels through partnerships. This is why well-structured partnerships WILL normally have a much higher success rate than single owner businesses.

But, as the descriptions of the functions indicate, it takes different types of people with different motivations to perform the three different functions. Thus, the partners must be different enough for them to want to take responsibility for and perform the different functions. This way the differences in the partners becomes a valuable asset so each partner will contribute in the function that suits him or her, while the other partners are performing the other functions. That is why partnerships with very similar people who want to perform the same functions, and even compete to do so, at the expense of the performance of the other functions do not last.

Key # 6 The partners know, understand, and eagerly accept their differing roles. The partner who is best suited for performing the managerial function will want to concentrate on fulfilling this function for the benefit of the business. The partner who is best suited for the visionary function will seek to become the visionary leader of the partnership and not try to interfere with the performance of the other partners, if they are also performing well. The partnership has to be run like a puzzle. Each piece in the puzzle fits with the other pieces, and the pieces do not compete or conflict with each other. The sales person has to want to sell and perform well and the bookkeeper has to want to be the bookkeeper and perform well. Both will not try to perform in the role of the other. If they do try to perform the roles of the other, conflicts occur and then the completions of their own roles are degraded, as they abandon them.

Key #7 The partnership success increases dramatically when all of the partners fully understand themselves first so they know they like their roles and they are best suited for the roles they take. If the partners are confused about what they want to do, and what they do not want to do, or are more driven by external competitive forces, then conflicts, jealousies, and confusion will occur to the detriment of the partnership. But when all partners fully accept and understand their roles and work together as a well-oiled team, the partnership will thrive. Each partner will want to discover what he or she wants to do, does not want to do, and is very good at performing before starting and structuring the partnership. This is where engaging a personal coach by each partner will provide priceless value. Once the partners have determined on their own what they want to do and do not want to do, then they can conduct open and truthful discussions to determine which partners fulfill which functions in advance. These frank explorations will almost certainly result in successful partnerships.

Key # 8 Create an exit strategy for every partner to leave under terms agreeable to everyone going in. The priorities and desires of the partners may change and the conditions of the partnership may change that will create conditions that are no longer suitable for every partner to remain in the partnership. Creating a just and accepted exit strategy for every partner, greatly reduces the chances of disruption to the partnership, and allows the partnership to thrive and the exiting partners to be better off as well. Many times, just having a clear and documented exit process, will greatly reduce confusion, unwarranted friction, and provide the comfort for partners to remain fully focused because they do not feel constricted or trapped. This reduces partnership squabbles and breakups.

Remember that the partnership model for starting businesses has proven to be very successful, especially when done right from the beginning.

Good luck

However, sometimes partnerships just do not work

Coming soon

How to split partnerships to reduce the pain and increase the gain for all partners.