Two pals with similar skills and background launch a hot startup.They love working together and the first six months are a super-cool adrenalin rush.
Then reality strikes. Sales are slow, cash is tight and self-doubt creeps in. They argue, and conflict becomes personal. Before long, you think: My business partner has become a jerk!
One option is killing the venture and starting again – on your own or with another partner. But your friend owns 50 per cent of the equity, and business separation means losing a year of work and most of your life savings.
Option two is falling back on a shareholder agreement that spells out what is expected, how shareholder disputes will be resolved and what happens in a separation. Except you never thought to have one drawn up and don’t have funds for costly legal advice.
Option three is fixing your relationship. Here are five tips to improve your partnership, save the venture and keep the friendship.
Entrepreneurs fight. It’s an occupational hazard when ventures search for their customer, product and business models. They make mistakes along the way. Accept that conflict is an important part of the entrepreneurial process and can improve the venture, if handled well.
Develop a process to argue
Your venture needs a safe place where founders can state their views and feel the final decision is objective rather than personal.
Edward de Bono’s Six Thinking Hats model, which forces founders to think in parallel rather than go back and forth in combative fashion, is a useful tool. Do whatever works for you, but ensure the venture has a clearly communicated process to engage in and resolve conflict.
So often, the little things that bug you about your business partner build up and spark a row.
Create a frame of reference
Entrepreneurs without a shareholder agreement can still lay ground rules. Something as simple as a written position description can spell out what is expected and agreed on. It overcomes the problems of differing expectations and gives you a reference point when things go wrong.
So often, the little things that bug you about your business partner build up and spark a row. You don’t say what you’re thinking because you don’t want to offend. You soften any criticism, or preface it with, “We need to do this or that”. The tip-toeing becomes tiresome.
Instead, say what you mean. If you think your partner sucks at presentations, say so, but keep it professional. Find solutions rather than harp on problems. For example: “I think you could really benefit from some presentation training. I know people who could help. Would you be interested in that?”
Find some safe language to tell your partner when he or she is being a jerk. For example: “I need to talk to you about being late for meetings. I don’t mean to nag, but if we say we will meet at a certain time, we need to be there by then, or let each other know well in advance.”
Bring in the externals
Find a mentor to whom you can vent any frustrations and ask for advice. Consider an unpaid advisory board, or use your accountant to provide an independent opinion on issues. Consider external investors if the business needs capital. There’s nothing like a few shareholders to bring new perspective to a venture and stomp on a partner acting like jerk.
Tony Featherstone is a former managing editor of BRW and Shares magazines.