Cleaning & Restoration Association News

One is the Loneliest Number

February 10, 2004
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"A partnership is like marriage without sex. All of the problems with none of the benefits."

It can be so darned tempting. You are overworked, under appreciated, the phone keeps ringing and the pressure is enormous. You feel so very alone as a solo entrepreneur. If only you had someone to share the load with. Inevitably, the question arises, "Why not find a partner?"

On the face of it, a business partnership offers many advantages. Finally, someone that will care as much about your business as you do! After all, it will be their company too. A partner that will share the work load, help with the selling and, hopefully, go out on half of those 3 a.m. emergency water damage calls. And perhaps most enticing: a business soul mate that will offer you a shoulder to cry on. Sounds good, doesn't it?

Let me be clear here. The vast majority of business partnerships are a complete disaster, both financially and emotionally. Sure, I know Uncle Louie and your dad were in business together for 30 years on a handshake and they are still best friends (stories like this remind me of smokers pointing to a 92-year-old, two-pack-a-day smoker to prove that smoking is not harmful to your health). For every successful partnership there are 100 that end in bitterness, anger and resentment. Many times, failed partnerships saddle one or both sides with a hefty financial loss too. So why do most partnerships fail so miserably?

Sharing control. Chances are, you became an entrepreneur to avoid the confining strictures of working for someone else. But when you add a partner, to a certain degree you do "work for" and answer to them. And if you are the founding partner in the arrangement, it can be very difficult giving up control of your "baby."

Shared liability. In most forms of partnerships you become legally liable, and certainly ethically responsible, for the actions of your partner. If their customer service, business judgment or, even worse, financial management skills are lacking, you pay the price.

No clearly defined expectations. As a sole proprietor you don't need clearly defined expectations for yourself. You do it all because you have to. You are all there is, and we're talking survival here. So it gets done somehow. But remember that when nobody is assigned to do a task, that is exactly who will do it...nobody!

"Unfair" division of labor. Generally, one partner is "stronger" than the other and winds up doing more. Or at least thinking they are doing the lion's share of the work (even more common: spouses who are absolutely convinced that their husband or wife is getting taken advantage of in the partnership). The result is the same: a festering resentment that damages the business relationship and, left unchecked, will destroy the partnership.

Higher overhead. The owner is always the most expensive employee of the business. When there are two owners, the higher wages and benefits that each partner expects inevitably add substantially to the company's "nut." This may not be a problem if the partnership is "synergistic" and each partner's efforts contribute more to the company than they take out. But all too often that isn't the case.

The pie gets smaller. I personally know several cleaners who impulsively offered a relative half of their business 30 years ago. No big deal. After all, it was just a tiny operation with a beat-up van and an old portable.

But now the founder is at retirement age. If he had stayed as a sole proprietor he could easily sell this very successful company and retire. But since 50 percent of the sale proceeds would go to their "accidental partner," they must unhappily keep working (And yes, in all of these cases the original founder would have been just as successful without the dead weight of a partner).

Forgetting to "start with the end in mind." In the cheery honeymoon glow of starting a partnership, it often gets overlooked that people and their goals change. So what happens when one owner wants to move, retire, sell or quit, and the other one doesn't? Most partnerships never develop a formula to deal with this extremely common "diverging partner" problem.

Most people go into a partnership because they are lacking one of three things: money, skills or emotional support (some may be lacking all three, in which case the logical question is, "Should they be going into this business in the first place?"). Let's examine each of these needs:

Never take on a partner to fund your business. After all, that is why God created banks. Borrow money and pay the interest on the loan. No matter how high the interest is, it will be infinitely less than splitting the pie in half when selling the company years down the road. Never give up equity and never give up control to save a few bucks in interest.

Never enter a partnership just to acquire skills. Either educate yourself (carpet cleaning is not exactly rocket science) or hire someone who does know what they are doing. Pay them very well for their knowledge. The high salary they are earning will be infinitely cheaper to you than giving up half of your company and its future sales price.

Emotional Support
Of course, the initial appeal of a partnership is not just about money and work. The emotional attraction of a supportive partner, someone to back you up and share the load, is very tempting. However, there are alternative ways to find emotional and practical support that do not carry the legal and financial baggage of a partnership. Your attorney, CPA or banker often will happily buy into your dream and become more than just advisors. Develop relationships within local business networks, industry trade associations and, yes, even with some of your quality competitors. And of course, don't overlook the "partner" you may already have in your spouse. Now there is someone who has a vested interest in your success!

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