By Ken Korkow
I have been very fortunate in having had successful business partnerships with three good friends - Shan Burke, Don Smith and Ron Young. However, statistically only one out of every 35 partnerships is successful; all the rest fail. So based on this dismal record, it would be wise to avoid entering into partnerships. The question is, why do partnerships fail so often? I think there is a simple reason: Because the right questions were not addressed at the beginning, before legal documents are signed and handshakes are exchanged.
Here are some basic principles - and some words of caution - to consider before taking the risk of entering a partnership:
- Do not be "unequally yoked." To start, the Bible offers this stern warning: "Do not be unequally yoked with unbeliever. For what do righteousness and wickedness have in common? Or what fellowship can light have with darkness?" (2 Corinthians 6:14) Just as you would not "yoke" a horse and an ox together, followers of Jesus Christ should not "yoke" (be tied together) with those that are not-yet-Christians. Even both parties professing to be Christians does not ensure an equal match. A Shetland pony and a Clydesdale are both horses, but are of different size and temperament - even sharing some similarities, they would be "unequal."
- What about correction? Even if you were "equally yoked" with someone, what would happen if God were to discipline your partner? In other words, what would be your response if the person undergoes necessary correction in his or her life, for whatever reason?
- What is the purpose of the partnership? Each party must write down their expectations or goals for the partnership. These do not have to be identical, but must be compatible. For instance: What happens when there is a profit? What happens if there is a loss? Can those goals be accomplished without entering into a formal, legally binding partnership?
- Who has final authority? When crucial decisions must be made, who has the ultimate authority? Would you be willing to surrender all of your authority to that person?
- What is the personality profile of each partner? You might be good friends, enjoy working together and share common values, but if your personalities and work styles are very different, conflict might be inevitable.
- Do you agree on biblical principles? If there is a disagreement in the partnership - whether short-term operations or long-term goals and objectives, what would be the mechanism for resolution? Would you both be willing to use the Bible and its principles for business to resolve conflicts?
- Spell out ALL the details in writing. There is a saying, "A short pencil is better than a long memory." Make it so clear that if necessary, both of the executors of your estates could easily wrap up the details. Cover what would happen in the event of divorce, disability, disinterest, death, debt, or dishonesty.
- ALWAYS have a buy-sell agreement. This should be an agreement either party can initiate, at anytime, without dispute. If the partnership does not work out, ending it should not cause unnecessary problems.
- Involve your spouse in the process! Being a controlling, workaholic risk-taker, I often would not involve my wife in business decisions. I had the experience and an MBA. Liz was only a schoolteacher. But I made many foolish mistakes until I learned that in every phase of life I was in partnership - with God as "managing partner," and with my wife as "equal partner." And I accepted that she should have "veto power" over my business decisions. At first I feared I would never do another good business deal again, because by the time Liz figured it out, all the good deals would be gone. But slowly I learned God had equipped her with the 'intuitive radar' that I do not have. As a result, we have avoided MANY bad deals and have enjoyed a life that works for us.
Ken Korkow lives in Omaha, Nebraska, U.S.A., where he serves as an area director for CBMC. This is adapted from the “Fax of Life” column that he writes each week. Used with permission.