By the end of 2001, I had lost just about everything – including the income I needed to live on and the clients that were the backbone of my business. I was feeling frustrated, hurt and angry. A split had occurred in the firm with which I had partnered when I had launched my recruiting agency, PeopleServe, three years earlier.
In many respects, our partnership had been a marriage made in heaven. The two owners of that other firm and I had been personal friends for years. In fact, I had known one for 15 years. We brought critical and complementary talents to our work.
GOOD, BAD, AND VERY UGLY. While my partners had been in business for several years and had an impressive Rolodex to which I could have access, I brought the people-oriented skills that would enable them to make the best matches between candidates and jobs. Our agreement was that they would handle back-office tasks, such as billing clients and paying the people we placed, while I would personally visit the employers to ascertain their needs and scour the market for the necessary talent.
All marriages are made in heaven at the beginning; otherwise, they most likely wouldn't take place – and the same is true for business partnerships. What we didn’t do right, and what I’ve learned as a result, speaks to the fact that even the best partnerships can deteriorate, and that plans must be in place for what to do if that happens. What is at stake is nothing less than the preservation of the business reputations of all partners, if not the friendship that may have once bound them.
I cannot reveal the name of the firm with which I had partnered or the names of the owners. But I can and will share my experience in the hope that it will help others. A breakdown in a relationship as intimate as a business partnership isn’t an easy subject to discuss, and few entrepreneurs are willing to broach the topic. But bringing the issue out in the open might help preserve pairings that, more often than not, comprise the backbone of fledgling companies.
HELL BREAKS LOOSE. At the core of the issue at PeopleServe was the dissolution of my personal relationship with one of the two owners, the one I had known for 15 years. The tension between us began early in 2001, eased somewhat during the ensuing months and flared up again and intensified during the fall.
By then, it was clear we could no longer communicate. Trust between us had completely broken down. Nor did we have the means to resolve our differences.
In fact, what we didn’t have were factors that I have come to believe are vital for any business relationship, even (and perhaps especially) those involving friends. The first is a written contract. Never had it occurred to me, or to us, that a friendship of so many years would disintegrate. But a breakup can, and did, occur. If we had had a written contract, all parties would have been protected.
The second item that we lacked was what I call an “understanding.” By that, I mean a set of parameters from which to proceed if differences occur that cannot be resolved. In other words, in such a case, what would be the priority? Would the partners agree to terminate the business relationship for the sake of the friendship, or vice versa or would their understanding comprise something in between.
SILENCE AND SPITE. It doesn’t so much matter what those boundaries are, just that boundaries be set prior to the partners needing to turn to them and preferably at the beginning of the relationship.
By the fall of 2001, since we partners weren’t able to talk to or trust each other, a number of unpleasant incidents occurred, such as their refusing to remit to me the payment I was owed for work I had already done, leaving me without an income. Our verbal agreement had called for me to receive a cut of the fee they were responsible for collecting for each person I placed.
Approaching the clients directly was an option I considered (and in one case acted upon) to prevent my company itself from going under. But these were technically the clients of my partners’ firm, which was more established than PeopleServe. In the instance in which I resorted to this tactic, I was told that, despite my skill at making matches, my partners’ firm had the deeper pockets and that the employer’s allegiance needed to be to the more powerful entity.
By this time, we were clearly headed for court, that place were things get ugly and reputations are ruined. It is where no one in business ever wants to go, and I wasn’t an exception.
In my resolve not to go to court, I took one last step that I would recommend for partners who are unfortunate enough to have reached this point. I turned to an intermediary – in my case, the other owner of the firm with which I had partnered.
I contacted this individual by telephone and asked if he were interested in a final opportunity to settle our differences out of court. I was delighted when he said that he was. We met at a coffee shop and made a promise that proved to be pivotal: We agreed that no matter how heated our discussion became we wouldn’t get mad at each other. Instead, we’d get mad at the issues.
Throughout our discussion, we focused on the things that were separating us. Significantly, we left our lawyers at home. And by the end of the meeting, we had come to a settlement that we could live with and that would preserve our business reputations, if not our erstwhile personal friendship.
IN BLACK AND WHITE. That was some time ago. These days, I am rebuilding PeopleServe and have already made the type of headway that gives me hope for the future. I have a new business partner, one with whom I can communicate openly. We have a part-time employee and have placed five people contracted to us with area employers.
What’s more, my new partner and I have a written agreement, even though (and perhaps especially because) we are fast becoming close friends. We also have an understanding. In other words, we have all of the elements that I’ve learned are necessary for making partnerships work and for setting the stage for parting gracefully when they don’t.
Source: Linda Moraski, BusinessWeek Online