Running a successful company, year after year is is hard. But starting a company is where most people ultimately fail. Our company is now into its second decade of success and growth and we’ve learned a thing or two along the way.
As I mentioned in the last episode of this series, you need to quit talking about doing it and get yourself some experience. Then believe in yourself. Surround yourself with people who believe in you too without compromise. And then… just never get comfortable.
This advice can be used for almost any endeavor in life. But today, let’s talk a little more specifically and go deeper into succeeding in business once you’ve actually started. Here are a few more specific tips that may help you along the way.
LESSON #8: Partnerships are hard. Be careful. Be very careful.
As I mentioned previously, when I started out with our company, I had a business partner. Many businesses start out as partnerships because two friends or family members think they can be more successful if they work together to build a company. Why do it yourself, when you can do it together, right? Two heads are better than one, right? Many hands make light work, right?
My new partner and I immediately went to work. We nurtured a small client list and did every type of work for almost nothing sometimes. We built websites, we designed things, we programmed and built things, we were marketers, salesmen, accountants and we carved out a living for a while in our respective basements. We were scrappy and did whatever we could to bring in revenue and keep things growing.
One of our clients was a large, local fair in the area. The big draw during the week of the fair was the concerts and shows. So it wasn’t long before they were asking us about how to sell tickets using the internet. So what did we do? We built an online ticketing system from scratch.
Starting this ticketing business was our way of getting creative, which I’ll talk more about in a minute. For established businesses, I would caution against going in too many different directions and to find your focus. But when we were just starting out and needed revenue, we did everything we could to make it. Take your opportunities where you can get them because you never know how they will benefit your budding business in the future.
When we started, there weren’t that many companies focused on doing ticketing for fairs or small events. So we hit the road selling our ticketing system to fairs. We went to fair board meetings and fair conferences. (Yes, apparently there are such things.) We did ticketing for concerts for bands like Foreigner and Peter Frampton. The future looked bright.
Then trouble began to brew.
See, having a business partner is a little like being married. If you get married too early before you date long enough to really know your partner, you might find yourself in divorce court before too long. This is what happened to us, and our new company was on the skids — mostly because we didn’t take the time to document all the intimate details of our working relationship in a partnership agreement. If you don’t do this and you’re 50/50 there will be a time when you come to an impasse, and there will be no recourse except to get lawyers involved or go your separate ways.
We chose the latter.
Without going too deep into the drama, here are just a few things that you need to consider if you’re starting a business with a friend, or more importantly, a family member.
- You need to be in agreement about how you’re planning to market and grow your company. At the most basic level, you need to agree if you’re going to even spend money on marketing. When you’re running a business, you do need to spend money to make money most of the time — unless your plan is to go the gorilla marketing route. Even then, it’s going to cost you time and effort.
- Decide who will actually be doing the work, and who will be out marketing and selling what you do? How you divvy up your responsibilities between doing the work and selling the work is going to be an important decision. It’s going to be hard to share every responsibility.
- And that brings me to money, money, and money. I don’t have stats on this, but my guess is that most partnership failures are based on issues with money. This may be obvious, but someone has to handle billing and accounting. Someone has to have direct access to the money to make payments, and do payroll. Someone has to decide when you’re allowed to spend $100 on office supplies, and when you can spend $10,000 for a major purchase. Remember, you’re equal partners at the end of the day and each person is going to have their own opinions.
Could you imagine being in a partnership where only one partner decided how money was spent, and worse yet, was the only person who could access the bank account and accounting? Well, that’s where I found myself in this partnership. I just assumed that I would have access to the money. I just assumed that I would have a say in how we spent money. I just assumed that I could at least review the financials if I needed it. I just assumed that my partner would be reasonable and that it would all work out fine in the end with a little debate and discussion.
He dug in his heels and so did I. Because we were 50/50 partners and we had no rules, there was nothing in place for us to resolve our differences. There were no rules. There was nobody to cast the deciding vote. There was nobody empowered to make a final decision on these things. There was no formal agreement in place beyond a simple contract and a handshake. When it comes to business, that’s sadly, rarely enough.
The advice that I have from this experience is simple. Take the time and have a professional attorney draft a partnership agreement if you’re starting a business with another person. You absolutely must be on the same page about how you will run the business. They will help to walk you through the issues and questions that need to be answered and documented. Just doing this work in advance could save your partnership in the future because you have basic rules and a foundational understanding around important issues.
But sometimes, things still don’t work out. There are just too many hurdles in business to cover everything that you might have to face together in your day-to-day work. So, how you will exit the business if things don’t work out? You might be tempted to skip this step because you’re excited about the opportunities, everyone is getting along, things are sunshine and roses. But before you know it, reality will hit and the honeymoon will be over. You’ll be faced with issues related to control, spending, hiring, marketing, pay and bonus distributions, the current and future direction of the business, rent, utilities, management tactics, processes, branding, insurance, questions about your roles in the company, who is the final decision maker and what happens when there’s not enough money to pay your team or yourself.
The examples here are just scratching the surface. The vast number of issues and decisions that have to be made when you are running a company are endless. When you have a partner, every decision could become an invitation to a battle. So take the time to work through these things before you even open the doors of your business whenever possible. Formalize a partnership agreement and work with a professional to get it done. For me, this advice is non-negotiable, and based on what I know now, it would be an insane move to start a business without it.
LESSON #9: Get Creative
So in 2006, I found myself at a crossroads. The partnership that I had, ended about a year after it started. I was officially going out on my own. My partner was going to take part of the business, I was going to take another part of the business, and we were going to go our separate ways.
One day, it was just me, and it was as simple as that. I was on my own. For me, there was some safety in a partnership. We both had different experiences and talents, strengths and weaknesses. And now I was completely out on my own and I had to get creative or close up shop.
Just to mention a few things… I wasn’t a programmer. I wasn’t an accountant. I wasn’t a salesman.
At this point, there were also clients who I had never met. The clients originally belonged to my partner so I had never had time to even meet with them during the short time that we were in business together. Many of the people didn’t even know my name. So, even though I was getting half the business, I was inheriting clients that could all leave me in an instant because there was no relationship there.
The first day that I was on my own I remember sitting in my basement in a stupor because I was so overwhelmed. Technically I had clients, but I didn’t really have a business. I had spent tens of thousands of dollars to buy into a business that really had no value to me personally unless I could circle the wagons and begin to build relationships with my clients.
Regarding this issue, I really had to get creative. My nature is to be an introvert. I’m at home behind a computer. I’m not a natural salesperson. But I set to work and I immediately dove in head first because I had no other choice. I had to provide for my family and that’s what I set out to do.
On that first day, I had to deal with the first big problem. My company didn’t have a name, so my creativity was put to the test on the first day. I came up with a few business names and ran them by friends and family. Ultimately, I settled on the name Sanctuary.
I liked the name because I felt that it might help me connect with the people that needed to trust me but didn’t yet know me. I was going to work hard for them and become their trusted Sanctuary. It’s an odd name that confuses people sometimes. But it has deep meaning for me. It represents my commitment to my work, and to the people that work with me. The name Sanctuary is a promise. That’s what I wanted to give people as I set out to solidify relationships with my new clients. I had paid for them already and now I just needed to make that investment work out. For me, there wasn’t any other choice and creativity was the only option. I had to move forward and that’s what I did.
When it was just me, my creativity started with choosing a name that solved a problem and sent a message. That creativity continued every day as I began to form relationships based on that message and promise. But it was only the start. Starting and building a business is not easy. Having a great product or service, working hard, and even having money in the bank is only the start. You will be faced with hurdles every day and you’ll be forced to get creative and think “outside the box”. Those who can do this successfully, in every instance, will ultimately be the businesses that succeeds.
So in closing, partnerships are hard. But they don’t have to be. Start your partnership with deep conversations and formalize your agreements with a detailed partnership agreement that’s guided and produced by an experienced professional. Little cracks in the relationship, and small issues, can turn into big problems, company destroying fissures. Working through many of these things in advance, and putting rules down on paper will help to remove many of the things that will bring your new company to an end.
Then, the really hard part is going to start. You’re going to be faced with things every day that require creative thinking. There will never be a day when you’re not required to be creative to stay successful. Hopefully, you’re wired to work this way already as an entrepreneur. If you’re not, start doing whatever you can to learn, and keep learning so you’re able to continually find ways to be creative and think outside the box.
Related episodes in this series:
Do you need a partner to help you grow your business? The Academy is a service of Sanctuary and we can help you with all your digital marketing needs. We’d love to chat with you about how we can help you grow your business. Learn more about our digital marketing services here.
Sanctuary, a digital marketing agency based in North Canton, Ohio, helps companies grow their businesses by developing and executing end-to-end marketing strategies. We believe in partnering with purpose to create and execute powerful marketing strategies accountable to measurable results.
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