Navigating the Challenges of a Business Partnership: When to Exit or Continue

As a managing director of an 117-year-old printing company with over 35 years of experience in the business world, I have had a wealth of diverse and challenging experiences. In this article, I will share insights into the dynamics of business partnerships from a seasoned business perspective, providing you with critical guidance on when to continue or terminate a partnership.

Understanding the Fundamentals: The Two Rules of Deadfish Partners

Business partnerships can be likened to fish - some thrive and others can become deadweight, dragging down the entire partnership. In the business arena, there are two fundamental rules to navigate:

Rule #1: Don't Close Down the Business Due to Deadfish Partners

One of the cardinal rules is to never shut down a business venture simply because a partner is dragging it down. The company is bigger than the sum of its parts, and closing it down can often lead to a loss of valuable market share and customer relationships. It's better to take steps to address and improve the situation rather than throwing in the towel.

Rule #2: Always Buy Out Unwanted Partners

The second rule is to remove unproductive or unwanted partners from the business. This process may involve professional intervention, legal tactics, or persuasion. Regardless of the method, it is imperative to resolve the partner's role for the health of the business. Removing a partner who is detrimental to the business is essential and can be done by various means, such as buyouts, legal actions, or negotiations.

Key Factors to Consider in a Business Partnership

Ensuring a healthy and successful business partnership involves several critical factors:

1. Integrity and Trust

As outlined in the business saying, 'You do your best regardless of pay,' each partner must commit fully to the business's success. Moral and ethical integrity are crucial in maintaining trust and synergy within the partnership. A lack of trust can lead to misunderstandings, conflicts, and ultimately, the demise of the partnership.

2. Competence and Expertise

It is essential to partner with individuals who bring diverse expertise and skills to the table. Incompetence in a key area can undermine the entire partnership. Each partner should have the necessary skills and experience to support the business goals and objectives.

3. Flexibility and Adaptability

Running a business involves constant challenges and unexpected disruptions. Partners should be ready to 'firefight' and 'repair' as needed. This adaptability ensures that the business can navigate through challenging times and maintain its success.

4. Transparent Budget Management

Accurate and transparent budgeting is a non-negotiable factor in business success. Miscalculated or poorly managed budgets can lead to financial setbacks and stress within the partnership. Regular and open communication about financial matters can help maintain a healthy partnership.

5. External Influence and Intervention

When a partner is not performing as expected, various strategies can be employed to address the issue. These can include borrowing from the bank, finding alternative financial routes, or even considering legal or financial intervention to secure a more productive partnership. Ensuring that the partnership is sustainable and profitable is of utmost importance.

Conclusion

As a seasoned business leader, I emphasize the importance of maintaining a healthy and functional partnership. Navigating through the challenges of a business partnership requires a well-defined strategy and a commitment to the success of the venture. By adhering to the two rules of deadfish partners and considering factors such as trust, competence, adaptability, and transparent budget management, partners can ensure the longevity and profitability of their business.

If you find yourself in a partnership that is not living up to its potential, it is crucial to take decisive action. Borrowing from the bank, seeking investment, or removing a partner can all be viable strategies depending on the situation. The goal should always be to create a partnership that enhances the overall success and sustainability of the business.