Creating Successful Business Partnerships

Tony Wanless

| April 4, 2011

Like marriages, business partnerships can wreak havoc when they fracture. Some tips for creating happier unions.

Increasingly, B.C. entrepreneurs are partnering to open businesses, and it only makes sense, since the sum is often greater than the two halves. But as with marriages, partnerships can go bad and the results can be as cataclysmic as any divorce.  

The Problem 

For nine years Diana Sillery, a former personal trainer to athletes, co-owned a Whistler spa with a partner. The two were strangers before they got together to launch this venture, but when they were introduced they immediately clicked. After meeting and  hatching their idea, they went to a business coach to assess their partnership potential and were told they were a model partnership. 

The business grew and at one point had 40 employees. But competition began heating up and profits started to slide. As Sillery tells it, her partner – whom she declines to name due to ongoing litigation –  suddenly disappeared without a word in 2008, and Sillery soon learned she had decamped to Australia. Sillery was left with a pile of IOUs, and even worse, her own family had invested in the business and she felt a moral obligation to return the capital. 

Sillery was fighting a tough battle in a changing market and at the same time her two young children required more of her time. She didn’t have the energy to take on the task of rebuilding a business alone. Sillery closed the spa in spring of 2009.  

 The Solution 

Sillery spent the ensuing year in her Squamish home being a mom, working part time, volunteering and ruminating over the events. The closure was  brutal both financially and emotionally, especially since she had continued taking investments until the final days.  

Looking back, she says the signs the partnership was unravelling were there for some time. As Sillery describes it, her partner was having trouble at home and became increasingly disengaged from the business for more than a year before she left. Even as they were pressed to revive the business, Sillery says, her partner was increasingly uncommunicative and evasive. 

The partners had tried other business coaches to no avail. Each time they found one specializing in partnerships, Sillery says, her partner would eventually drop out of the process. Sillery now believes that she was preparing to leave.  

Eventually, Sillery’s only solution was to put it behind her as best she could and move on. Like someone at the end of a marriage, she engaged in deep self-understanding sessions. She realized her life’s purpose is to educate and help people. She is now studying for her certification as a financial adviser. 

Her mission has become helping people in other business partnerships avoid similar situations. The suggestions she offers below may or may not have staved off the collapse of her own business, but they could certainly help anyone who is thinking of forming a partnership.  

Lessons 

• Do your homework. A partnership is a huge commitment and partners must complement each other. When thinking of a potential partnership, take off your personal hat and study the situation strictly from a business point of view.

• Get a written partnership agreement. The agreement should outline roles and procedures. It should definitely include a buy-sell agreement to prevent a partner from simply pulling out. 

• Pay attention. Partnerships need constant work. Partners should schedule regular reviews and  hold each other accountable for their actions. They can also discuss plans and personal feelings about the business.