Self Employed or Bust

Self Employed and Joining Forces

July 21, 2008 – 7:00 am

I’ll be the first to acknowledge that two heads can be better than one. When it comes to being self employed, joining forces with a partner or partners can result in distribution of workload, addition of skill sets, diversity of ideas and approach, mutual motivation and division of assumed risk. With all that going for it you’d think I’d have little more to say than “go for it!” But I won’t.

Yes, there are definite upsides to having somebody slugging through the trials of getting your own business off the ground but there are also some definite downsides. You’ll have to seriously look at your prospective partners and also look inwards to determine if a solo or joint venture is the best solution for you. If you assume the latter, make sure you’re protected. What follows will compare and contrast the pros and cons of joining with others in a business venture.

Distribution of workload is one obvious pro. Having a partner who can beat the streets for prospective clients while you diligently continue work on the product can represent a huge savings in time. On the other hand, you may find your partner spends most of his afternoon at the local sports bar watching TV and eating chicken wings rather than drumming up business. Your two options to protect yourself in this regard are to pick partners who are as motivated and excited about the business as you are and to clearly define goals and responsibilities between you. Then diplomatically but firmly call him on it when he isn’t holding up his end.

The addition of skills you may not have yourself can serve to reduce the expense of hiring consultants or expending the time to learn the needed skills yourself. Be conscious of egos, though. The guy bringing all the legal skills to the table may consider himself deserving of a greater cut than you feel is fair if he deems your contributions to be inferior. Set boundaries and define earnings percentages right out of the gate before the argument has a chance to come up.

Diversity of ideas and approach can lend flexibility and adaptability to your business early on. You’ll potentially be better able to react to unforeseen circumstances and have more creativity to apply to the business up front. On the other hand, you may find yourself arguing over which idea is best and whose approach is better. Nothing short of excellent diplomacy and the mutual willingness to compromise can prevent one or the other of you from feeling they are being walked over time and again. You should both leave your egos at the conference room door.

Mutual motivation is wonderful when you are all equal to the task. When one person begins to feel defeated, their partner or partners can give them the suck-it-up speech and remind them of the goals to get them back on track. But if your partner is a true quitter, you’ll find yourself stuck doing progressively more and more of the work by yourself. If you’ve structured your business with the thought of two equally producing partners in mind, the loss of one can be devastating.

Division of risk can be truly misleading. Yes, all things being equal, you and your partner would both share in the financial burden of getting things going and mutually suffer if your venture fails. Things are rarely equal, though. If you have deeper pockets and are primarily funding the venture while your partner provides something else, you run the risk of being the one to pay the price in the event of a suit or when debtors come collecting. Both will go after the person with the deepest pockets. Also, your partner will just have lost time while you will have lost coin. Knowledge of how to protect yourself through incorporation or the formation of a limited liability partnership will be critical here.

About one year ago I had it in my mind to start a website based on my interest in outdoor adventure sports. It occurred to me that if the site were a success it would actually fund the activities I most enjoy. Trips would be expensed in the name of research, equipment written-off and I’d be reaping rewards just for doing and writing about what I love.

I pitched the idea to my two climbing partners over lunch and we made big plans around big ideas. Soon after building the first incarnation of the site (with no help from them), I found myself alone after having planned everything around a division of labor. One friend sunk himself into school and the other sunk himself into a differnet online business venture with a group of techies (on the assumption it had more revenue potential).

Though I still maintain the site, I realized that, without the help and contributions I’d planned on from my friends, I’d bitten off far more than I could chew. I needed their stories, their experiences and their willingness to actually leave their wives and girlfriends for the occasional weekend trip to the outdoors. None of it was forthcoming and I had to scale back dramatically and push my expectations way out to the future. In a poetic twist of irony, the friend who pursued the other online venture found himself subsequently abandoned by his partners.

I don’t blame my friends for bailing on the project. They have their own dreams to pursue and it isn’t like we signed a contract or anything. We just brainstormed the idea over a couple lunches and outings. I do blame myself for building it with their creative contributions in mind. I love them both but the two of them can’t even decide on where to go for lunch without me picking the place and I tried to build a business with them as equal partners in mind? This is one failure from which I’ve learned a lot.

So with the pros and cons and my own personal example in mind, make absolutely certain that – if you decide to partner up – the self employed venture you are planning is something to which you are mutually suited and equally committed. Anything short of that will either leave one of you in the lurch or one of you resentful.

Though I know this entire post sounds like a condemnation of the partnership option, it isn’t. The tone is meant as a cautionary reality check to ensure that, whether you go solo or join forces, you choose wisely; both in the decision and in picking your partners.

Stumble it!