Partnership Questions
Dear Trellis,
I’m founding a new company with a new team, and want to make sure we kick things off in a strong way. I want this company to last and thrive and be wildly successful. How do I do what I can to ensure that?
Ready to Get My Feet Wet in San Francisco
Dear Ready,
As a 10x business founder, one of the most important choices you can make, which will help determine the success and viability of an entity, is the founding team. This team dictates the values, the dynamics, the intensity of work, the expectations for deliverables, the immediate and longterm plan.
This immensely important choice is often made through a combination of happenstance, luck, and strategic planning. Assumptions between and among founders abound unless the team makes the concerted effort to talk through goals, contingencies, expectations, personality styles, and exit strategies.
I’ve spent a lot of time considering founding teams as I’ve launched various enterprises and nonprofits, and found that questions vary by team, but some are universal and mean way fewer headaches down the line.
In my opinion these questions are best answered a chunk at a time, in-person, with wine and food. One person acts as note taker to memorialize the answers, or everyone co-creates in a shared doc. I’ve grouped the below questions by topic, from most crucial to least. These questions are adapted from Nina L. Kaufman’s The Key Questions for Business Partners, 100 Vital Questions to Ask Before Going into Business with Someone Else, a book as valuable as it’s graphic design is cringy. There are many more questions in the book than I’ve outlined below, but these are, in my eyes, the most important.
Values:
What are the values of the company we all agree on?
What are our views on what it means to have a “quality of life”? Are those views similar or compatible?
What does “customer service” mean to us? Are our views of serving customers the same or complementary? Does it have the same meaning and importance to both of us?
Do we operate with the same level of intensity? Do we have the same sense of urgency about the same things? How do we feel about meeting deadlines? About paying bills in a timely manner?
Goals:
What did we like about past jobs that we might want to incorporate into this company? What do we want to avoid?
Where do we want this business to be in 3, 5, 10 years? Are we aligned on growth plans and possible exit strategies? Do we want to build the company for life or build it to sell?
What are our individual expectations of each other? Do we have similar views of what is realistic to ask of each other?
How do we each deal with change? Do we need logistical reasons for making a change, such as seeing how it fits into a vision for the future? Are we “adrenaline junkies,” feeding off constant change?
Communications:
Do we communicate in a similar way? If not, are our styles complementary? Do we prefer to discuss things informally, or have a list of items in advance to give ourselves time to think it through? Do I prefer to listen and talk or read and write?
How often do we feel we need to communicate about what's going on in the business?
How do we let people know when we are upset? If something goes wrong, are we compatible in the way we'll deal with it?
How was approval or disapproval expressed in our family of origin? Can we accept criticism? Can we accept compliments? Are we able to give constructive criticism to others?
Money:
If the business fails to generate enough income to pay us our salaries for a period of time, can we still afford to meet our personal expenses? For how long? What belt tightening flexibility do we have?
What financial (or “capital”) contribution will each of us make to the business? Do we have the resources to make more, if necessary? How much more? Over what period of time? How will we handle a situation where one partner contributes less than another?
How will we make spending decisions for the company What kinds of purchases must be jointly decided upon?
What is each partner’s spending style and habits? Impulsive? Made with or without consulting others? What is everyone’s credit rating? (Lenders are likely to check the credit history of all partners, which could impede your ability to get needed financing).
If one of us needs to make a lifestyle change (new baby, ailing parent, health challenges) that would temporarily reduce our ability to work, would that be OK? For what period o time? Do we anticipate any such lifestyle changes in the foreseeable future? At what point would this situation make us want to revisit how we have structured ownership and control of the company?
Control:
What position will we each, as owners, hold? What will your role in the business be, and what do you expect mine to be? Will one person have the ultimate decision-making capacity? Can I share management with another? Am I okay with not controlling or having the final say? Are there parts of the business where I absolutely must have final say? What if we both want it? How will we overcome the impasse?
Is there a need for one of us to actually be a leader? Who will it be and in which contexts? Will leadership vary, depending on the context? How will leadership be handled? What will we do if we disagree with the way the other is leading?
Do we have compatible ways of making decisions and solving problems? Am I focused more on the bottom line and striving to be objective or am I focused on trying to achieve consensus and be inclusive? What about my partner? What does it mean if our styles are different?
How do I express disagreement? Do I take it personally? What is my arguing style? Combative? Withdrawal/silent treatment? Do I have to get my way? Do I capitulate easily? What is my partner's arguing style?
How will we handle disagreements on the profound issues facing the company, such as whether to develop multiple streams of business, and if so, which ones? How will we handle disagreements on what the company's priorities should be? Is there a way to negotiate a solution that meets both needs? Am I committed to trying to find such a solution, or does "winner take all?" What about my partner(s)?
Agreement:
How will decisions be made in the company? Is each one of us comfortable with the other making decisions in areas where we have not been consulted? If not, what areas are they? Do we need 2/3 majority or unanimity on certain issues? If so, what issues are they?
How long do we expect, or would we like, our partnership to last? Are we willing to commit to staying with the business for a certain minimum amount of time?
What if a partner gets an outside offer to purchase her ownership interest in the company? Should the company get right of first refusal to match the offer? What is the buyout procedure for a partner who wants to resign or retire?
What if a partner gets sick or is temporarily (less than six months) disabled? Will he be paid a regular salary For how long? What about a longer-term disability?
How will we value the business when a partner wants to leave?
Life/Work Style:
What kinds of working hours are we planning to keep? Is one of you 24/7 while the other is 9-5. What kind of hours do you Ideally want to work? If pressed, can you work more? For what length of time?
Is your idea of a vacation switching from sales to marketing, while your partner's is nine weeks on the Riviera?
What is your business style? Do you run it with military precision? Are you more relaxed, go-with-the-flow? Do you work better alone or with a team? Are you task-oriented or relationship-oriented? Detail-oriented or big-picture thinker? Do you perform well under pressure or do you fold? How forgiving are you with mistakes and deviations from your style? Is the other's style one that works for you?
Does one of us have chronic health concerns or family members with concerns? If so, how does that affect your ability to be available for work? For the company's needs? For outside functions for the company? What kinds of accommodations might the company need to make for you?
Does anyone have children? If so, will there be regular times when you cannot be in the office? If you plan to have children, when might this occur? What is your leave policy?
Roles:
On what tasks would (or does) each of us spend time? On what areas does each of us like to spend time? If money were no object, how would we ideally want to spend our time in the business? What do we like to do least? Most? What do we like to do vs what do we need to do? Can we work out a division of labor (both the drudge-work and the fun tasks) that’s fair?
I’m curious to hear what questions you think are important in your business partnership considerations. What did I miss that you consider crucial?
Cheers,
Rebecca