Posting by Stewart Christ, MBA, Principal at BMC Associates
In business and personal life I often hear the term “partner.” I thought I would share some observations about the various meanings and usage of this term in a business context. This is important because partner relationships are indeed demanding and, in spite of this fact, companies built by business partners are often more successful!
Many companies and business models are built by partners working together initially as co-founders to create the company or to manage its subsequent growth together. Partners may be shareholders in a closely held corporation, members of a LLC, or they may be in a conventional legal partnership. Their ownership and control may be the result of their founding of the company, their contribution of capital, an inheritance or succession process, or because their individual contributions are sufficiently important to warrant an ownership interest. In each case the partner relationship is based on many factors and involves important interpersonal dynamics.
At BMC Associates, we assist business partners in resolving issues related to ownership, compensation, roles, authority, control, and the necessary element of trust. Our work may include launching new partnerships by doing up-front work to reduce the prospect of future partner conflict. We also help existing partnerships that may be held back by partner stress to enhance partner alignment and improve the likelihood of future success.
Family business scenarios may add complexity to a partnership. In some cases family members might choose to work together from the start. However, family members often find themselves “accidental partners.” These unintended business relationships may include family dynamics that can make interpersonal issues more complicated. Family business owners rarely refer to one another as business partners. When we work with family members we strive to help them reach this understanding.
Reflecting on the points above, I propose that we define the term business partners in the following way. Business partners are individuals with:
- material ownership and control over the company,
- material interest in the success of the company, and
- a desire to share their ownership, control, and future success with others.
When you are in a good partnership you know it, and when you are in a distressed partnership you also know it — often more acutely. I urge you to use the term partner with care and to care for your partnerships, as they are an important part of your future success.