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The Partnership charter

The Partnership Charter by David Gage Millions of people co-own closely held companies, family businesses, and business partnerships, but establishing them and keeping them together is never easy. Here, finally, is the guide they have been waiting for.... Read More

Don’t Let Strife Ruin Business Partnerships

Investor's Business Daily

by Sylvia Tiersten
Investor’s Business Daily
October 6, 1999

“A lot of people say if you can avoid being in a partnership, you should. But that’s not my advice.”

– David Gage, Director, BMC


It was like a war zone, David Gage remembers. A successful data research firm ran into trouble when one of its co-owners kept making decisions without consulting his partner. Relations soured between the two men. And key employees beat a path for the exits.

With threats of lawsuits flying, the company called in Gage and his cadre of attorneys and consultants from BMC Associates to straighten things out. Gage and his team cut each partner’s share to 40%, brought in an outside CEO and set up an independent board of directors.

The company survived; both partners are still there, too. But what can business partners do to avoid that level of acrimony? Plenty, say experts like Gage, a psychologist who founded Washington, D.C.-based BMC Associates a decade ago. “People often refer to their business partnership as a marriage,” Gage said.

And as in a marriage, money, trust and control can be hot-button issues between you and your partner. It’s important to learn how to tackle those issues, especially in this day and age. In business, partnering up has become the rule, not the exception. “You rarely see someone found a business all by himself anymore,” said Charles Rothstein, managing partner of GMA Capital in Farmington Hills,Mich.

“It’s not possible, especially in service industry, for one guy to sit on top of an organization chart and serve as field general.” Still, yielding control to a partner makes plenty of CEOs cringe.

“A lot of people say if you can avoid being in a Partnership, you should,” Gage said. “But that’s not my advice.” Many Partnerships fail, Gage reckons, because they weren’t structured right in the first place.

Discover the joy of compromise

Successful partnerships start by recognizing your limits. Partnering won’t work if both of you are pulling in different directions and aren’t willing to bend, says Elan Susser, who co-founded GoldMine Software Corp. with college buddy Jon Ferrara.

Although Susser and Ferrara shared a common vision–that computer networking was the place to be–they sometimes disagreed on specifics. “We’re more structured today than we used to be–too structured in my opinion; not enough, in John’s,” Susser said. After the two debated formalizing dress codes, meetings and office procedures, Susser said, “we chose the middle ground.”

Forget about romance

Like young lovers, new business partners may recoil at the idea of background checks or prenuptial agreements, said Azriela Jaffe, a Lancaster, Pa.-based business consultant and author of Let’s Go Into Business Together (Avon, 1998). Such formalities may imply a lack of trust. But unless your partner-to-be is a close friend or family member, a credit check is in order, experts say.

Get help when you need it

Linda Kafka, a partner at San Diego-based KBM Building and Security Sevices Inc., was at odds with partner Maureen Gay. Both were trying to control too much, and both were stepping on each other’s toes. “We knew in our hearts that we wanted this relationship to work,” Kafka said. “We had to learn how to give up control.”

A team of business psychologists saved the partnership by teaching the women to stick to their knitting. Kafka would focus on marketing and acquisitions while Maureen Gray would handle financial issues. KBM now has operations managers who oversee the day-to-day concerns.”Maureen and I meet with them once a week, and we’ve learned not to micro manage them or each other,” Kafka said.