Once upon a time there was a scorpion, who wanted to get from one side of the creek to the other. Being unable to swim, he asked a passing frog if he could catch a ride on his back. ‘But...’, said the frog. ‘How can I be sure you won’t sting me?’ ‘Why on earth would I do that?’ objected the scorpion. ‘I can’t swim. You might die – but I’d drown!’
This seemed sensible to the frog and he agreed to carry the scorpion across the creek. Half way across, swimming steadily, the frog felt a sharp pain in his back. ‘What have you done?’, he cried, as his legs grew weak and he began to sink. ‘You’ve killed yourself as well as me! ‘ ‘I couldn’t help it,’ said the scorpion, as he went under. ‘I’m a scorpion.’
There are people in business who will sting you – complicate things, cause conflict, look for problems, cheat you – regardless of the effect on their own reputation, effectiveness and prosperity. Perhaps, like the scorpion, it’s just their nature: either way, you can’t change them. But you can see them coming.
Then there are ‘sand castle’ people: people who build their sand castles really close to the water’s edge and love it when the wave comes in and wipes them out... How do you pick the scorpion and the sandcastle person? Look at their track record. If you want to do business with somebody, you’ve really got to know what projects they have previously done; what motivated them to undertake those projects and whether they succeeded (or didn’t succeed, but acted with integrity, and learned from the experience). You’ve got to know whom they have done business with in the past, and how those relationships (with partners or consultants) worked out.
Ask those few tough questions – and don’t take the answers at face value: arrange to talk to the past partners and look at the past projects. (If your prospective partner takes offence or puts barriers in the way of this legitimate investigation, warning lights may go on...) You’re looking for signs that a person has motivation to do the right thing well, and to see it through to completion. You are looking for signs that a person conducts business relationships with integrity and flexibility. If you get a glimpse of conflict, pending or past litigation, partnerships where ‘everybody else’ did the wrong thing, or great projects that collapsed for lack of resource, planning or perseverance... don’t give this person a ride across the creek – and don’t contract to build sandcastles with them!
You have to assess this risk unemotionally. Scorpions and sandcastle people are great fun. They’re very persuasive. They can be the nicest people. They will tell you that they’ll look after you; they’ve learned from their past mistakes; they thrive on risk and adventure... But it’s simply too risky for you to do business with them. Let them prove themselves on a couple of projects before you have anything to do with them.
However good the credentials and track record of the people you enter into partnership with, as with any business project, it’s good to have an exit strategy – and to have your exit planned, going in... It’s not negative or ‘untrusting’ to go into a partnership with a clear idea of how it can be unravelled. The point is to be able to unravel it in the simplest and most positive way for both parties (ideally without involving a third party who has an interest in dragging out any potential conflict: for example, lawyers!).
I’ve often backed out of joint venture agreements, because we couldn’t agree on a clean way to unravel the partnership if things went bad. I can assure you that you don’t want to be tied to partners who don’t want to be in the project, or who have lost heart for the project: they can make life unbelievably unpleasant. There has to be a clear trigger for unravelling the partnership: some objective marker which tells both of you that you have got as far as you are going to get together. And there has to be a clear process for unravelling the partnership.
Discussing this up front, before you sign into a partnership, may feel a bit like proposing marriage to someone – and immediately negotiating how you would go about getting a divorce. (That’s exactly what ‘pre-nuptial agreements’ are for.) You’re not ‘jinxing’ the partnership, or stating that you don’t think it will last: it’s just sensible risk management. If your prospective partners are scorpions or sandcastle people, it will weed them out – or enable you to protect yourself when their different agendas emerge. If they are people of good intent and motivation, it will be an opportunity to put all cards on the table – then forget about them, in fruitful collaboration, until (or if) the worst happens.
Have the discussion. Include in your partnership agreement terms which state exactly how, at the election of either party, you can part ways: what notice periods are required, whether one partner can buy the other out, how assets will be divided up, who will value them and so on.
>>> Coming Next: The Old Man and the Starfish
Please note: This is an extract from the Success From Scratch – it may not contain the exercises from the full version of the book/audio set, for full version please contact us or follow our blog for more.
Thank you,
The team@Custodian
