Creating a Successful Business Partnership

Starting a company with a pal? Here’s how to make sure both your venture and your relationship thrive.

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When Meghan Chayka cofounded sports analytics firm Stathletes with John Chayka and Neil Lane eight years ago, she had no qualms about launching a start-up with partners. John is her brother – and now the General Manager of the Phoenix Coyotes – while Lane is a close friend who lived with her family for a while. “We had a lot of time to get to know each other well.”

Take a hard look at relationship dynamics before starting out and hammer out specifics, such as who will play what role, and the direction the firm will take.

The trio had also created other business pitches in the past. “We all knew our working style and how we communicate and what our core values are,” says Chayka, who is based in Toronto. “We knew our strengths and weaknesses. It makes the process a lot easier.”

Many companies start the way Stathletes did – friends or acquaintances talking about a business idea and then partnering up to make it happen. While Chayka’s experience with her partners has been a good one, often founders struggle to get along. Whether you’re starting a company with someone else, or thinking of bringing someone on to help run the organization, here’s how to make a business partnership work.

Personalities matter

Karen Fischer, a partner at consulting firm RK Fischer and Associates in Whitby, Ont., has seen many partnerships fall apart. “There are people who won’t sit down together to dinner now,” she says. She cites the case of two friends who went into business together – one with an Type-A personality, the other a “worry wart.”

“They didn’t get along – and they’re not doing well,” she says. Fischer says that if potential partners have radically different personalities and are already experiencing conflicts before going into business together, there could be trouble.

She suggests taking a hard look at relationship dynamics before starting out and advises would-be partners hammer out specifics, such as who will play what role, and the direction the firm will take. Chayka agrees: “Sometimes people shy away from difficult discussions. Set expectations early and be open and honest,” she says.

Good paper makes good friends

You need a shareholders’ agreement that protects both parties and the new business, says Fischer. It should outline the partners’ responsibilities, how shares are distributed, how much each person is investing and how decisions will be made.

Items such as first right of refusal, which gives one partner an opportunity to buy out the other before a third party gets that chance, can also be included, as can language around what would happen if a partner becomes incapacitated. “The more detailed you are, the fewer discrepancies you’ll have,” she says.

Communication is imperative

Like with marriage, constant communication is a must, says Chayka. She’s always talking to her partners, mostly via communication software such as Slack and video chatting. “Technology makes it so fluid and lets us stay in touch,” she says. “We have dialogues weekly about opportunities and new innovations,” she says, adding that dissent is welcome.

An environment in which conflicting opinions is fine, says Fischer, as it builds new opportunities for the business. However, the key is knowing how to handle different viewpoints. “You need to figure out how to compromise and work together,” she says.

Expect roadblocks

All partnerships will invariably hit some snags, says Fischer. It’s a bad sign if partners start working independently of one another, stop communicating or keep secrets. Considering setting up a board of advisors who can settle disputes or provide guidance.

Chayka admits that it hasn’t been all roses for Stathletes and that issues have come up, but those problems helped make the business and partnership stronger. “It’s really easy to blame your team,” she says. “Learn from it instead.”

Stathletes, which analyzes hockey data and provides insights on the performances of players and teams, is about to broaden its scope to include stats on women’s hockey and other sports. It will require a pivot on the part of the firm, but because the three partners have a good relationship, Chayka is confident it will go smoothly. “We’ve put ourselves in a position to win.”

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