Monday, May 27, 2013
How to Manage Your Business Partner
When Ari Mir, 31, and Amos Elliston, 38, met as coworkers at a Los Angeles startup, they instantly clicked and began bouncing around ideas to hatch a business of their own. Seven years later they launched Pocket Change, which seeks to build a universal rewards currency similar to American Express points but accumulated through apps on your phone.
Launched in 2012, the San Francisco-based company has already raised $5 million in venture capital. While Elliston and Mir enjoy each other's company, they say the partnership has been successful largely because they've set boundaries and maintained their own lives outside of work. This work-life divide limits their overreactions when it comes to business matters, says Mir. "We're not best friends," he says. "You need some sort of distance or you are always going to take things a little too personally."
Co-founder disagreements and misunderstandings can sink a company before it starts. Here are four ways to manage your partner and set the business up for success:
Get an outsider's perspective.
Most startups don't have a board of directors but still need an outsider's viewpoint. Frank Demmler, an adjunct professor of entrepreneurship at Carnegie Mellon University's Tepper School of Business, advises founders to give a monthly presentation about company goals and challenges in front of two or three mentors. Presenting to a third party keeps partners from blaming each other for company decisions gone wrong. For example, partners who disagree about how to price their product can present their cases to their mentors instead of getting into a direct conflict with one another. Getting into this habit also helps the founders gain perspective on their decisions, since their mentors are removed from the day-to-day ups and downs.
Solve problems before they happen.
Just like you would create a business plan, it's a good idea for founders to sit down together, write out potential hot-button issues and think through solutions in advance. For example, you'll want to outline each partner's time commitment to the company and how you'll handle personal problems, such as illness. It's also important to discuss how and when the partners will be paid and strategies for growing the business, says Demmler. For instance, one partner may want to keep the profits, while the other may prefer to re-invest them in order to scale. Taking the time to address what's important to you upfront can help prevent future breakdowns in communication, he says. "Do it at the beginning when rational minds are engaged."
Clearly outline job responsibilities.
If one or more founders isn't pulling their weight, it can breed resentment. One way to avoid this is by assessing and redistributing the amount of work each one does through weekly partner meetings, says Shahab Kaviani, chief executive at CoFoundersLab, an online co-founder matching service based in Rockville, Md. Knowing you will meet regularly to discuss the workload can help ease any lingering tension. Keep in mind that a balanced division of labor doesn't necessarily mean divvying up every project. For example, instead of splitting the marketing work down the middle, one partner can focus on marketing while the other concentrates on operations. Of course, you'll want to consider each other's strengths when making those choices...Read more»
By: Alina Dizik