Many first time entrepreneurs partner up to start their first business.

This is quite understandable considering that:

1. It’s their first business and it’s reassuring to have someone else “figuring it out” along with you
2. Usually your skills complement each other. So, for example, one partner will be good with accounting, marketing, taxes, and numbers in general while the other partner will be the “technical” person who engineers the product. This pair is just one example. Obviously there are plenty of other combinations where the partner’s skills complement each other.
3. If you are short on cash it’s hard to hire people, so sometimes an attractive option is to trade ownership in the company (this is essentially all a partner is) to get more people on your team.

This reasoning all makes sense on the surface, but I’m here to tell you something a little counterintuitive: DON’T TAKE ON PARTNERS WHEN STARTING A BUSINESS!

This is one of those cases where I think the conventional wisdom is wrong. In fact, I think the more partners you have all grouping together, the more problems you will have.

Before I proceed, let me be clear: I am not saying that you should start a business without the help of anyone else!

You should of course have good mentors, brainstorm with others, learn from others, and delegate to others. But I DON’T think you should have partners (two or more people who are equally invested and in charge of the company).

Here are a few reasons why:

1. Disagreements go Unresolved

   Discussions, disagreements, and differences of opinion come up all the time in the work place, and ultimately they have to come to a conclusion. For example, some people may want to launch the product on time even though it is only 75% complete, while some OTHER people may want to delay the launch of the product until it is 100% done.

   At a typical company, it’s up to the leader (whether it’s the CEO, President, manager etc) to just make a decision and move on. Some won’t agree, but at least everyone is on the same page.

   The reality is that probably EITHER decision would wind up being ok, as long as SOME decision is made. The worst thing they could do is make NO decision. Endless discussion and debate would continue while nothing else was getting done!

   Unfortunately this is what happens if you ever have two people in charge who disagree (e.g. partners or co-presidents). There is no single person at the top in the chain of command, so no decision can be made until both people agree.

   Partners can generally compromise or work out most disagreements, but there are always a certain percentage of decisions that both feel passionately about and they can’t agree! What ends up happening is that resentment starts to build and progress stops. A contest starts to take place as to who is actually in charge! To see a great example of this, checkout the movie Startup.com, which is a real life documentary about a startup company.

2. Everyday Work Takes Longer

   Even just simple everyday decisions take longer when you have partners because, again, there are two people in charge. Simple things, like approving a revised draft of a document, now get sent to two people instead of one.

   What this means is that a constant flurry of emails and phone calls are going back and forth between the partners that could be done much faster by one person in charge.

   Each partner wants to include the other on all communications as a courtesy. After all, wouldn’t it be rude to approve something or make a decision without consulting your partner first? Delays, delays, delays.

3. They Often End Badly

   Want to know a guaranteed way to mess up a friendship or relationship? Go into business together!

   No matter how close you are to someone right now and how much you trust each other, chances are that going into business with them will put a serious strain on your relationship. In fact, there is a fairly high chance that you will end up never speaking again or end up in court!

   How can this be? I admit, it’s tough to believe, and when a great opportunity comes up to start a business with a partner, most people will fill forget this and go for it anyway. It’s almost as if the little voice in our head says “you know, I remember hearing something about how you should never go into business with a friend, but I’m going to push that aside for a moment. This opportunity is just too good to pass up!”

Maybe this is one of those lessons most people have to learn the hard way before it really sinks in!

Partnerships end for all kinds of reasons. One common one is that one or both partners will start to feel like the other isn’t pulling their weight. Often we get caught up in our own work and don’t see the value someone else is contributing. We start to have thoughts like “man, I could hire someone to do what little they are doing, and stop giving them half the profits!”

Another is that one partner could lose interest and have other priorities eventually. Do they still deserve their 50%, should they take a pay cut? Talk about an awkward conversation to have!

Finally, problems of trust and loyalty seem to always come up as well. When it comes to money, we human beings are funny creatures. We get suspicious for all kinds of reasons, real or imagined. When it comes to money, it’s very easy for feelings to get HURT.

Personal Experience

I learned this lesson the hard way. The first three businesses I started were with partners. Thinking back, the only reason I did this was FEAR. I simply didn’t have the confidence to start a business on my own and thought I needed other people’s help. When it came time for number four, I vowed to be 100% owner this time no matter what!

Of the three partnerships I was involved in, none of them worked out particularly well. The first person, I occasionally keep in touch with but I lost all trust for him and wouldn’t do business with him again. The second person I am still friends with, but our friendship was certainly strained while we were partners. I eventually bought him out and we have remained good friends ever since. The third, I stopped speaking to and parted ways with after a messy closing of the company that cost us both money. I later reincorporated on my own.

Of course, I’m not saying your experience will be exactly like mine, and there are examples to be found of successful partnerships in the business world, but lets just say I don’t think your chances are good!

What is the Alternative?

Finally, there must be a better way. Why don’t you just NOT partner with friends or family members?

Unfortunately, in practice this is impossible. Friends and family members are the only people you would ever really get into business with. After all, who else is left? Strangers and enemies?

The better solution is to just not start a business with a partner at all. Ever. Have the confidence in yourself that you can figure it out and get help when you need it, but you don’t need to share the profits with anyone!

Surround yourself with great people. Have good MENTORS who are more successful than you that you can bounce ideas off and get great advice. Have a NETWORK of people to review products and documents and give you feedback. And have WORKERS (either independent contractors, or outsourced work) to do the things that you don’t know how to do.

Partners are unnecessary and could lead to the downfall of your company. Don’t say I didn’t warn you!

And do check out that movie, Startup.com. It really is quite good.