People issues in partnerships and what to do about them

Starting a business alone is a tough job – you’ve got no sounding board, no support and you’re reliant on only your own set of skills. So, when the business starts to grow and become more demanding, the idea of bringing on a partner seems quite enticing. But, in most cases – when choosing the right partner for the business, important factors which could keep a thriving business from becoming a sinking ship are ignored.

In the latest series of Nedbank Business Accelerator podcasts, Business growth expert Pavlo Phitidis explores the secrets of success as he profiles three future-proof businesses who have weathered the storms that come with building a business with partners.

Moving beyond technical and commercial skills,understanding values is key to partner sustainability.

A seasoned and passionate entrepreneur – Lynne Scullard from Scully Scooters started her business from the ground up and only considered her first partnership after winning a competition. Whilst it all worked well, her search for a strong operational partner led her to partner with two CEOs who weren’t exactly the right fit for the business.

Later, trying to enable the business to the next level of growth, I was trying to find a really strong operational partner.

Lynne Scullard from Scully Scooters

The one valuable lesson that Lynne Scullard learnt after two failed partnerships?

We often, as entrepreneurs underestimate our own skill sets because we know what we’re really good at and… the things that we don’t really love, we kind of thing think – somebody else should do that.

Lynne Scullard from Scully Scooters

Does it have to be a partnership – I think, I’m rethinking that a lot now.

Lynne Scullard from Scully Scooters

In my experience, people partner with you because they see something that they love… and, then once they’re in, they want you to do it their way not your way.

Lynne Scullard from Scully Scooters

KEY INSIGHTS FROM PAVLO:

It’s something we all do – don’t ever underestimate yourself, you often know more than you realise.

If you get into a partnership because you’re looking for complementary skill sets, that doesn’t necessarily mean you might have the same interests.

If you get into that relationship, stay in your sandpit. Don’t interfere in their domain and the space of your partner – it creates doubt, it suggests a lack of trust.

Test the values of the person you’re getting involved with.

If you think you saw it, you did. If in that blink you suspected that the person you’re getting involved with is not the right person, don’t let your confirmation bias supersede that – paranoia is fairly well founded.

Listen to Pavlo's chat with Lynne Scullard from Scully Scooters

Understanding a person’s true value and locating well in a growing business makes for good people-partner relationships.

For Paul Hanly from Newleaf Technologies, what started off as a recruitment business in distress quickly evolved into a fully-fledged educational business in the technology space. The original business was a struggling, complicated business with various partners and, a strong need for change. Now, it is a successful business that relies on a strong partnership built with three key partners.

It wasn’t something that happened quickly – what we really did was try and change the long term vision of the business and then gradually picked people that could support each other… and then, almost naturally those that weren’t key participants actually didn’t want to participate anymore, anyway.

Paul Hanly from Newleaf Technologies

When choosing people, there’s a couple of things that I think you have to have right – I’ve had lots of partnerships over the years, some have worked really well and some have been spectacular failures – the most important lesson that I’ve learnt through all of that experience is to be very careful about who you go into partnership.

Paul Hanly from Newleaf Technologies

He says that there are some key principles which are absolutely critical when choosing people and they are:

First of all, we have to have some common ethics, business principles or morals. We’ve got to make sure that everybody’s thinking is on the same page. You need to share a common vision and also have a clear understanding of what drives everybody.

Paul Hanly from Newleaf Technologies

KEY INSIGHT FROM PAVLO:

It is about common sense – the excitement around building a business often lets us forego our common sense.

We forget for a minute to turn around and say, who actually am I getting into bed with and what do other people think and say about them, outside of my own biases?

When there’s excitement, you’ll always look for the positive. When there’s excitement, that when you need to find voices of reason – ask customers, ask suppliers, ask staff to get a sense of who you’re getting into bed with in a partnership.

Listen to Pavlo's chat with Paul Hanly from New Leaf Technologies

Matching the equity-to-job ratio to ensure equity in a partnership is key to sustaining relationships and therefore the businesses wellbeing.

Unfortunately, for Greg Bertish from True Blue Travel – his introduction to the world of business wasn’t all blue skies and still waters. In fact, he has navigated some of the most difficult times that the travel sector has seen with the introduction of technology. Coming into the business as a partner, Greg found himself in what seemed to be a one-sided partnership where he was doing all the work. It wasn’t until Greg was hospitalised with a rare illness and forced to allow his staff to manage the business that he made the decision to take the business (and, its debt) onto himself.

It seemed like it was going the right way but, then I found myself being dragged into being the one person who was doing everything.

Greg Bertish from True Blue Travel

In the end, they weren’t even holding up their side of the bargain in running the finances or the payroll correctly and, we actually got into a bit of trouble.

Greg Bertish from True Blue Travel

Contracts and partnership agreements which stand in black and white paper actually means nothing to the big boys because they literally told me that they could drag it out in court for years – and that was my new partner.

Greg Bertish from True Blue Travel

KEY INSIGHT FROM PAVLO:

When you look for a partner, you’re looking for skill, operational support, funding, relationships, and market access – whatever it is that you’re looking for, define it very clearly and draw the lines.

When you’re running the business and your partners are sleeping partners, then their roles are that of shareholders.

You as a director are responsible for building the business and their roles shareholders is to support the business, meet on some sort of regular basis and say, we are happy with our investment or we are not – in the instance that they aren’t, buy them out or offer to sell yourself out.

Listen to Pavlo's chat with Greg Bertish from True Blue Travel


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