We started our business as equal partners and we’ve been very successful. But now we can’t agree on the future. Is our partnership doomed?
Seven years ago John and Paul got together to set up a technology implementation business. They hadn’t intended to get into business together, rather it happened accidentally. They had met while working as freelancers on a large implementation and bonded over mutual dissatisfaction with the company that hired them. Reckoning that they could run the project better than the incumbents, they decided to have a go themselves, won a big project, and the rest, as they say, is history.
After a shaky start the first few years of the business were good. John and Paul grew the team to 12 people, won bigger projects and, it must be said, started to make a very decent living out of the business.
So against this backdrop you will be surprised to learn that after five years the relationship between John and Paul started to disintegrate.
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John was very excited about the business and saw opportunities to grow rapidly. He had a plan to expand the company to 100 people over the next three years and set his sights on it becoming the business in the niche.
Paul, however, had a different view. He wanted to see the business remain at pretty much the same size. With a young family and a sizeable mortgage he was enjoying running a business that had become very manageable, generated a good enough income to support his family and was relatively secure.
Paul didn’t want to gamble the business for future growth. John couldn’t sit back and watch the opportunity to be a major player in the industry pass him by.
Of course, there is nothing wrong with either John or Paul’s view; but they couldn’t both get what they wanted. Or could they?
This is a true story and one that’s worth sharing because two years ago John and Paul made an interesting, and fruitful, decision. John bought from Paul 80% of his share of the business and employed him as his COO.
Paul got what he wanted – a good job with a good salary – and John got what he wanted – the opportunity to grow the business. John and Paul still have a working partnership, but they reworked the structure of risk and remuneration to suit both of them. Two years later, it’s working well.
Many partnerships come unstuck over time because of evolving differences in appetite for ambition and risk. But it doesn’t have to spell the end of a good and profitable working relationship.
To read more Profitable Growth expert advice, click here.
Julia Bickerstaff’s expertise is in helping businesses grow profitably. She runs two businesses:Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of “How to Bake a Business” and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).