SMB Ownership: 5 Traits to Demand From Your Business Partner
The word “partner” gets thrown around quite a bit in the IT market. But this blog entry isn’t about technology partnerships. Instead, it’s about joint business ownership — working with someone to build a business together. Quite a few MSPs have joint ownership structures, with two or more executives holding major stakes in the company. But how the heck can you ensure you’re going into business with the right person? Speaking from personal experience, here are five traits and requirements you should absolutely demand from the person who will help to make (or break) your professional fortunes and personal sanity.
First, a little background. Frequent readers know I co-launched Nine Lives Media Inc. with CEO Amy Katz in January 2008. Our virtual team has grown to about 15 core members. (Which reminds me: I really need to blog about the team and thank each member individually. They rock. Stay tuned.)
But here’s the challenge: How do you actually build a small business that includes two (or more) owners who have strong personalities and a range of personal goals that may not always align? Here are five tips…
1. Demand Different Skill-sets: In far too many MSP offices, I see business partners who have nearly identical skills. That’s fine if you truly get along. But I think ownership is about bringing different skills to the table to achieve common goals. Examples:
- Apple: Steve Jobs (the evangelist) and Steve Wozniak (the engineer)
- Microsoft: Bill Gates (software meets business) and Steve Ballmer (the salesman)
- Oracle (early 1990s): Larry Ellison (the salesman and technologist) and Ray Lane (the operations specialist)
- MasterIT: J. Michael Drake (the finance expert) and Gary Wiseman (the technologist)
Admittedly, MasterIT isn’t a tech giant. Rather, it’s a small but well-respected MSP because Drake and Wiseman are greater than the sum of their parts.
2. Demand Common Financial and Family Goals: Imagine the following business ownership situation:
- The CEO is single, free spending, always at work, and always desperate for the next paycheck to pay down personal debt.
- The Executive VP of sales is married, committed to weeknights and weekends with family, and wants to pump money back into the business whenever possible.
The example above is a recipe for disaster. Partnerships — whether marriage or business co-ownership — implode when the partners can’t agree on financial and personal goals.
No doubt, you should strive for diversity in your company. But when it comes to the owners — the real stakeholders — they have to have similar personal and financial goals, and similar time commitments to the business.
3. Demand A Lawyer: I’ve written this one before. Before launching the business with a partner, make sure you both sit down with a lawyer to ask all the hard questions.
- What is each partner’s initial and long-term commitment to the business.
- What if one partner doesn’t hold up his or her end of the bargain? What are the exit strategies if one partner needs to step down — or pushed out the door?
- What are the insurance options to ensure (and insure…) the business marches forward in the event of a personal crisis?
- How will disagreements be mediated if the partners don’t see eye to eye on key decisions?
- And the list goes on.
4. Demand Measurable Outcomes:
- What are the financial goals for the business and the individual owners?
- What are the customer service and brand goals?
- What are the repercussions if goals and objectives aren’t met?
5. Demand Flexibility (Within Reason):
- Opinions and personal goals change over time. Sit down with your partner at least quarterly to ensure your personal and professional goals remain aligned. And if they aren’t aligned, make sure you work hard to find common ground in a proactive manner. Otherwise, your business partnership with wither and your business will implode.
Bonus – Demand Greatness:
- Are you the absolute best talent within your core area of expertise?
- Is your business partner the absolutely best talent within their core area of expertise?
I hate to write this… but second-best sucks. Only go into business with someone who’s absolutely amazing at what they do… or you’ll wind up resenting that your fortunes are tied to second-rate talent. Your business co-owner should be confident but not cocky, focused but open to outside opinions, driven but not reckless.
Amy and I spent yesterday in New York City, reviewing where we’ve been and where we’re heading. Now in our fourth year building Nine Lives Media Inc. together, our personal and professional goals remain aligned. Sure, we have our debates from time to time. But those discussions allow us to find common ground. Silence, on the other hand, would kill us and our business.
Best wishes for a killer Q2. And thanks for reading MSPmentor.