Four Secrets to Starting A Successful Business, Part 1
So, you want to launch a small business or reposition your company as a managed service provider (MSP). What steps can you take to maximize your chances for success? I’ve written a four-part blog to cover that very question. Tune in each day this week for the next chapter. Here’s part 1: Finding the right partner to co-launch your business.
As an entrepreneur myself, I’m not sure I could — or would — launch a business on my own. I find that working with a partner (a true co-founder and co-owner in the business) is far more effective and rewarding. But how do you find the right business partner, and do you even need one?
In the case of Nine Lives Media Inc. (MSPmentor’s parent), you can consider me an editorial director and a chief technology officer of sorts. While I build our Web sites, explore new technologies and shape our online communities, my business partner (Amy Katz) runs our business, builds strategic relationships, oversees sales, manages our accounting relationships, etc. Amy is CEO … but she wears many additional hats (CFO, etc.).
So, what can MSPs learn from our own strategy here at MSPmentor?
- Partners should have different skill sets: Amy and I have a lot in common — similar business goals, a drive to do great work, a general understanding of how to build media products. I’d say our skills have about 20 to 40 percent overlap, with the other 60 to 80 percent of our skills being completely different. Amy is a management and sales pro who thinks things through and really analyzes situations. I’m a shoot-from-hip type person who stays up at night because I’ve had an idea I want to implement immediately. But that can be dangerous if my “gee whiz” idea is a bad one. Together, we balance each other. Warning: If you have the exact same skill sets as your potential business partner, there could be some potential benefits (such as a shared workload) but you may also have blind spots in your business and your redundant expertise may do more harm than good.
- Partners should have similar financial goals and priorities: Imagine if one business partner was a big spender — and always wanted to lease the latest car, buy the latest computer, etc. And the other partner was far more conservative with money. Amy and I have avoided a lot of arguments because, generally speaking, we’re conservative with our money and we have similar goals: We reinvest in our business, we’re always looking for cost-effective ways to do marketing, we stay in low-cost hotels during business travel, etc. Hint: You’ll know if you’re a financial match with your partner by following some of these examples: Amy and I knew we were a financial match when we suggested similar initial funding for the company; initial salary targets; initial revenue targets, etc. Hopefully, our financial goals remain aligned in the years ahead, but so far we’ve been on the same page — or in the same ballpark — multiple times.
- Partners should have similar family commitments: Imagine if one partner was single with no family commitments and worked 24×7, including weekends. And imagine if the other partner was married with a family, and had to unplug from time-to-time to hang out with their spouse and kids. At some point, resentment between the two partners may set in. We’re pretty flexible at MSPmentor. Amy and I can reach each other at any hour of the day. And we do tend to work very long hours. But those hours are flexible so that our families don’t disown us. We have family commitments that we can’t abandon.
- Partners should have similar stomachs for risk: How much financial risk is enough? How much is too much? You’ve got to talk these things through. If one partner has deep pockets but no tolerance for risk, and the other partner loves Vegas but lives paycheck to paycheck, you’re in for a bad business marriage.
I’m sure I missed a few key points. Feel free to weigh in with your own perspectives. Did you start a business with a partner? Why did it work or what caused it to fail?
Part II in this series — focused on the two key people you need to meet before incorporating your business — will debut July 1.
Related
-
'PR' Doesn't Mean 'Press Release,' Plus Other Tips from a Media Relations Specialist
-
If I Were Launching an MSP Now: C3 Integrated Solutions’ Bill Wootton
-
How Fidelis Jumped on Convergence Early to Build its Core Infrastructure Offering
-
MSP 501 Profile: Ensono Redefines What It Means to Be a Full-Service Shop
Good start I’d say. I have a partner and each yr that goes by and we develop our business, our skills overlap less and less. It would have seemed like we had many skill sets in common that first year but as markets develop and our business develops, we have more things that differ as he is more management oriented and I’m more stragetic alliancess/business development oriented. Its been very productive for us.
One point you missed is that partners need to be able to agree to disagree at times as well as know when to compromise and build consensus. Just my $.02
Stu
Stu: Great point regarding partners needing to “agree to disagree” from time to time. Hopefully, the disagreement doesn’t involve a huge decision — such as whether to buy or sell a major business asset, etc.
Good partners will disagree frequently, I think, and force each other to come up with slightly revised and improved strategies. And you need to have a strong partner agreement in place — a true contract — to help you navigate business periods when you simply can’t agree on a major decision.
I cover partner agreements/contracts later this week.
Joe,
I am in the “all on my own” boat and would love to have a business partner to share ideas and build my Managed Services practice with. Are there any good suggestions for finding a business partner? Linkedin? etc?
I would hesitate to say where you should “find” a business partner. My situation presented itself. I’ve known Amy since around 1998. She and I were both at Ziff Davis Media. We kept running into each other, and gradually discovered that we had similar personal and professional goals. (To clarify: She’s married with two kids; I’m married with three kids. Do the math and you get Nine Lives Media Inc.).
We respected each other’s individual business achievements. By 2001 or so, we worked on a few projects together developing custom media for Fortune, Fortune Small Business and Business 2.0 magazines. It was Amy’s account and she recommended me as a content developer on the project. Suddenly, we realized: We were a good sales/editorial team.
Again, I would hesitate to find a business partner on a social network. If you’re starting a business with a partner, you’re going to need to trust each other with a range of critical items (finances, health care coverage, etc.). That type of trust doesn’t occur by accepting a LinkedIn invite.
In our case, Amy and I had a decade of experience working with each other and developing trust with each other.
My advice: Look in your current rolodex for a potential partner with whom to launch a business.
Thanks Joe. This is perfect timing for me as I am considering starting a partnership. Your next articles on this subject cannot come soon enough. 🙂
Joe,
This is an excellent post, from my personal experience of starting a business with two other partners and now growing the business with a total of six partners, your points are spot on. We have added partners through personal relationships as well as professional relationships with key employees. Each partner at our company brings a different perspective and skill set to the table that makes the group as a whole stronger.
I would add to your post that is vital to also establish a clear operating agreement for your company that is fair and clearly determines how operational and strategic issues are decided and managed by company directors.
Initially, when you first start your business, the relationship among a partnership is very informal and based on mutual understanding. As your business continues to grow and more reward/liability is at stake, company operations become more complex, and additional members are added it becomes impossible to operate without a strong operating agreement and structure for management. Proper preparation in the beginning for the evolution of your business will save you a lot of headache/heartache in later years.
In line with this suggestion, make sure you work with legal counsel that has significant experience in corporate tax law and structures. There are many many ways to setup a new entity and the right way for you is determined by the goals of your partnership, the personality of your partners, state tax laws, etc etc and a good legal adviser can walk you through an extensive process to determine the right structure. Legal issues and advice can obviously go on for ever!
Nick: Wow … it’s almost as if you’ve already seen the rest of my posts for this week. Yes, a “clear operating agreement” as you’ve pointed out is critical! Amy and I call it our partner agreement; it’s a legal document that really helped us focus on our goals, potential steps for problem resolution, etc. And yes … you NEED great legal counsel as you’ve pointed out. I cover those key items in the days ahead.
Dan @5: please keep us posted as you develop your business plan, etc. We’d love to hear more.
Great point Joe. I always like to have a partner to work with, it makes the whole experience much more enjoyable and raises your chances at success (so long as you pay attention to the details you mentioned).
Mike
http://www.everonit.com
http://www.smbitpros.com
Great article. I will certainly look forward to the next few chapters.
Myself and a partner just recently reached an agreement, and we’re headed off on a new venture together. I’m as exciting as I am nervous. Our skill sets overlap somewhat, but we mostly compliment each other’s. That’s one reason I feel we have a good chance.
Things just kind of fell into place and it seemed the right thing to do. One of the things that I was pleased with, was that our two visions of the future were pretty much the same. If you’re starting up a software company, it might be difficult if one partner wants to make just enough to not worry about money, and the other partner wants to become the next Microsoft.
Anyway, thanks again!