How to create long lasting business partnerships

In the late 90’s a bright, ambitious financial writer managed to strike a deal with a successful publisher.  As part of the deal, this young writer received financial backing, mentorship and a stake in the new fledgling publishing company they created.  In exchange, he would be the driver of the business.  The partners would support him, but even at the start, everyone knew that success or failure rested most firmly on the shoulders of the writer-turned-entrepreneur.

More than a decade later both the partnership and the partners have flourished beyond anyone’s best hope. The partnership has become a 9 figure/year business and the undeniable leader in its industry.   There’s no way the business could have achieved such rare success if the partnership hadn’t been in a position to thrive along the way.

This profitable partnership shares the same qualities of other great partnerships I’ve witnessed, including:

1. Everyone understands ‘the deal’.   “I’m responsible for X, you’re responsible for Y and we’re going to share in the upside and downside 50/50 (or whatever).”

2. Everyone is an honest broker.  There can be no conflicts of interest.

3. There is genuine respect and admiration all around.    You might get into spats from time to time, but the shared interest and mutual respect ultimately win the day.

All this is pretty basic, but here’s the important part….

The business will evolve as will the lives and relationships of the partners.   Ultimately the evolution can make ‘the deal’ unfair for one or more of the partners.   Unfairness sows the seeds of the most destructive force in any relationship… resentment.   Resentment has the ability to take down your business in a way that no competitor or economic threat ever could.

“A deal is a deal” – is Bunk.

Relationships are not about contract enforcement.  They are about making sure that all parties have an environment where they can flourish individually and in pursuit of the shared goals.    As things evolve, “the deal” will need to evolve with it.

We’re not talking about the day to day workload or temporary shifts in contribution to shared goals.  Focusing on that type of ‘fairness’ is petty and deeply counterproductive.  We’re talking long term, fundamental changes that virtually ensure ‘the deal’ would be unfair as far into the future as one could imagine.

If you want a partnership to succeed over the long term, it’s up to you to always be mindful of the fairness for both you and your partners.

How taxes really work:

Got this humorous email today. Enjoy.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20. “Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33.

But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before.
And the first four continued to drink for free.
But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,”declared the sixth man.
He pointed to the tenth man,” but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got TEN times more than I!”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

“mom-preneurs”

A recent report authored by the Institute for The Future talked about the growing number of “mom-preneurs”.   If you spend anytime working with entrepreneurs (especially micro-preneurs), this seems self-evident.   Some of the key findings of the report include:

As aging Baby Boomers “unretire” to leverage their lifetime of professional acumen in their own business opportunities, and as their children enter the job market, entrepreneurs will come more from the edges of the age spectrum. The younger generation, which is more adaptable to technology, views entrepreneurship as a way to maintain independence, and it might set the bar as the most entrepreneurial generation ever.

and..

With the glass ceiling blocking the corporate career paths of women, a rich talent pool has been sent to the small business sector. Among them are “mom-preneurs,” or mothers who start part-time, home-based businesses with the help of the Internet.

Download the Report Here