Project Person // Primer #12

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I’ve always heard horror stories about having a business partner, but when Matt Tanner pitched me on the idea of joining him at Same Page HR, I decided it was worth the risk. 

1. I liked the idea of sharing the responsibility and weight of a business with someone else.

2. I knew that we had similar visions and values but different skill sets, and I thought we might be fairly complementary as we built something.

3. I liked that I knew Matt enough to trust him, but if it didn’t work well (or if it went horribly bad), I could easily never see him again. Let’s go! 

We’re only a few years in, but we’d both say it’s been the best decision we could have made. (Of course, I’m terrified that putting that in writing will be the kiss-of-death, so this sentence is my knock-on-wood). 

I also know that we have a whole lot more to learn, so I’ve looped in Craig Johnson, who has been in partnership at branding agency Matchstic for 20 years now. He’ll share what he and Blake have learned as well.

Here are a few things we’ve found to be helpful: 

When deciding to go into business with someone, don’t just consider the skills, cash, or connections they might bring to the business. As my friend Kevin likes to say, you are going into business with someone’s character. How might they treat employees or vendors? How might they view money? How’s their integrity, in both their personal life and their professional? 

Craig says, “Find someone who has a different skillset than you. Don't double up.” He also points out that while having similar work and management styles is helpful, having a shared vision is imperative.

I remember asking my friend Stephen, who was in business with a drastically different personality, how they made their partnership work. His answer? They didn’t get there the same way, but they were always going the same place.

Consider going halfsies. Craig says, “If it's close enough to be 60/40, just make it 50/50. Just as in a personal relationship, it's nice when no one person can pull the power card over the other.” He says it forces you to work things out in a way that's good for everyone.

Create a formal and legal operating agreement, but also create a Common Sense Operating Agreement in a shared Google Doc. This is something Matt and I implemented as a single source of truth for agreements and expectations. In it, we address some nitty-gritty (and often evolving) decisions such as: 

• What happens if you disagree?

  • Do you have a mediation process in place? 

• What happens if someone wants out of the job? Wants out of the business?

  • How do you handle capital contribution? How do you handle equity? How do you view “sweat equity”? 

• What happens if you are no longer able to contribute?

  • If you die? If you are physically or mentally unable to work? What are the rights of your spouses or children? Can you replace your job but retain equity? 

• Can you do side projects?

  • What are the time commitments? What should you disclose? Are there any types of work that are off-limits? Can you use your company platform or connections? 

• How do you view profits? 

  • How much money are you keeping in the business? When do you take profit and tax distributions? How do you decide to reinvest? Are you offering profit sharing to employees?

• Are there any agreed upon owner write-offs? 

  • Are you writing off cell phone bills, home offices, etc? What about charitable donations or sponsorships?

Get very clear about accountabilities. We have an accountability chart we review quarterly. Our name can be in multiple boxes, and we have shifted it around drastically over the past few years. Just the exercise of just deciding and communicating who-owns-what has been incredibly helpful and clarifying. 

Learn how to share what’s most important to you. Matt and I use the phrase “hill I’ll die on” as a thermometer of sorts. Sometimes we’ll say, “Here’s what I think we should do, but it’s not a hill I’ll die on,” while other times we will say emphatically, “This is a hill I’ll die on.” This is just a quirky way we express our level of care about something. Sometimes it relates to really big things like hiring decisions or investments, but often it’s about little decisions like a response to an email. 

Schedule consistent owners-only conversations. Matt and I meet ~every other week, where we pick our heads up a bit and talk about things like taxes, vision, and team structure. We have longer versions quarterly and a day long meeting once a year.

Craig and Blake also do a quarterly double date with their wives and an annual partner trip. He says investing in these personal relationships has been super important to their overall health and success over the years.

Think long-term when deciding on compensation. Oftentimes, business partners are not just passive owners but are instead working IN the business as well. Because of this, we’ve learned to view our compensation in two parts: our salary as workers in the business and our distribution as owners. This will be particularly important as we eventually replace our “worker” selves one day. (Business owners might work for free, but no one else will!) 

We’ve also been advised that partners should always have the same salary as one another, so we’ve kept it that way thus far. (Of course, distributions would be different if partners own different percentages). 

And finally, we’ve seen the value of practicing mutual respect. Don’t talk negatively of the other person; in fact, talk highly of them! View and work through issues or frustrations as something outside of your partnership, not as something core to your partner.

Remember, a partnership should add value to both the business and your life.

-Callie

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Freddy Castro, the designer behind Miner Creative. He writes this email series for “creatives trying to get creative again”. (He also met AND PROPOSED to his wife at Big Fake Weddings.)

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Next week, I’ll share an interview with one of my heroes, whom I connected with by mailing an actual in-the-mail letter. Stay tuned!