Tuesday, February 20, 2024

EntreLeadership: This ship won’t sail

by BIZ Magazine

By Dave Ramsey

Small-business partnerships usually develop in one of two ways. In one scenario, two friends share energy, passion, and an idea. They want to live the dream together, but they don’t have much money. The second scenario occurs when you have two partners, one with the money, and one with an idea and passion.

In over 20 years of counseling and coaching, I’ve learned that business partnerships rarely work out. One partner almost always feels like he or she is carrying all the weight. And usually, the other partner feels they are the one carrying all the weight. Both often think, to themselves, of course, that they are the one working harder, smarter, that their ideas are better, and they bring more to the table. One may work 60 hours a week, while the other puts in 40, but they split the money evenly. See how tension can build? Maybe it sounds like a great idea at first, but the novelty of a business partnership can wear off quickly.

And often, that’s just the beginning of the drama. Even if the two partners get along well and split the duties fairly, spouses can jump in and create friction in the business. Unforeseen difficulties can also pop up, and throw a serious wrench into the best of plans. What if one of the partners gets seriously sick, and can no longer contribute? What if one gets into financial trouble, and there are liens against everything? What if one loses that drive and passion for the business?

So, what’s the alternative to a partnership? Depending on your situation, a joint venture may be a better idea. It would basically make you the owners of two separate companies, who are working under one legal entity. Also, joint ventures are much easier to manage than partnerships if you decide to part ways.

I know, I know. Everyone believes it won’t happen to them. But I urge you to beware. Partnerships almost always end, and when they do, they rarely end well.

Leadership and small business expert Dave Ramsey is CEO of Ramsey Solutions. He has authored numerous best-selling books, including EntreLeadership. The Dave Ramsey Show is heard by 16 million listeners each week on more than 600 radio stations and multiple digital platforms.