Why Most People Shouldnt Have A Business Partner

One of the most common questions I get asked is how my business partner, Dan Austin, and I set up our partnership.

They see our chemistry and here our business antics on the Collecting Keys Podcast and want to know what our secret is.

The truth is, we don’t really have a secret and we get together very well because we just happen to be great compliments of each others skill sets and personalities.

As I have watched more and more business partnership fail, and we have (unsuccessfully) had partnerships in other ventures, I’ve come to the realization that most people, ESPECIALLY new Entrepreneurs, probably are getting Business Partners for the wrong reason.

When someone is new to entrepreneurship, most of their decisions are driven by 2 things. Fear and Freedom.

People get into business seeking FREEDOM (which they believe will come once they start making money) but the counter balance to that quest for freedom is an innate level of FEAR around a wide range of things.

Fear of losing money. Fear of failing. Fear of inadequacy. Fear of hard decisions.

As a solution, most people look to bring on business partners as a way to share this fear and reduce their “risk.”

There are 2 problems that pop up immediately when people start going down that path:

1. Most people look to partner with friends, and most people are friends with people who are just like them.

2. Because they don’t have skills yet, its impossible to truly divide up workload.

When it comes to the first point, the issue arises because the partners end up in a situation where there are no alternative views to different situations.

Partnering with someone with the same general outlook, goals, and risk tolerances just leads to an echo chamber of non decision since there’s never an alternative lens for looking at anything.

Each person would be better off being left to their own devices and being FORCED to adapt or die rather than having a 50/50 owner with the potential to veto any of that growth that didn’t align.

When it comes to the workload piece, while it may start out with the business endeavors being perfectly divided, as time goes on one of the partners almost ALWAYS ends up taking on SIGNIFICANTLY more work than the 2nd one.

The newbie belief is “we will make so much money it won’t matter,” but all of a sudden when the Hard Working partner is writing a $100,000/month paycheck to someone not pulling their weight, you bet your ass it will matter a lot.

Really what most people need as an alternative is this:

1. Build the initial phase of the business yourself. Itll be hard, you’ll be uncomfortable, but you’ll grow a ton.

2. Once you know what your business does, HIRE someone to start helping do the additional development you need help with.

That’s right I said HIRE someone, even if you don’t think you can afford it yet.

You can give them a fancy title like a COO or something, but what you ultimately need is someone on payroll (who maybe has some ownership to keep them engaged), who is a minority owner to yourself so you can continue to make the decisions and reap the major rewards for taking the first major leap.

If you start with the business partner, you can accidentally end up with the most expensive employee you’ve ever had when they have 50% of your company but provide the same amount of work and decision making ability as someone you could have on staff.

As you get more experienced as an entrepreneur, its much easier to set up partnerships that are more mutually beneficial. But, starting out people haven’t had the hard growth yet and they’re likely just prohibiting themselves from getting where they want to be.

There’s my ramblings for the day! I’d love to hear your business partner stories.

Hit me up on Instagram.

-Mike