Ask 100 gym owners if you should take a partner or two in your business and 50 will tell you yes and 50 will tell you no. Find the pros and cons of partnerships here.
Depending on who you ask, partners are either a terrible idea or the only way to go. In reality it boils down to an honest look at yourself.
Bookkeeper, marketing, coaching, business operations, janitorial, maintenance and repairs, sales… the list of jobs that need to get done in a small business is never ending. Until you are able to grow your business to a stable level of revenue, all of those jobs will fall on one person – you.
Unless you bring in partners, that is.
This starts the age old debate, do you go it alone or work with partners to bring this new business idea to the community? In this article, we will explore the pros and cons, and help you decide which way you want to go.
Many hands make light work
— John Heywood
Starting up your gym will cost some money. Depending on how big you want to start, it could run upwards of $100,000 in initial lease/security, company organization buildout, equipment, and other startup costs.
Bringing in additional partners can assist in the amount of initial funds that need to be outlaid. This will spread your risk out and lessen the amount of money you have at risk initially.
Ideally, if you follow our Founders Club plan, you will be at break even or profitable from day one. Sometimes, this is not the case and owners might have to put money in monthly to cover initial costs. If you find yourself in this situation, your ongoing contributions to cover costs would be lessened with additional partners.
These next two are the main reasons for considering partners. Simply, there are more jobs to be done in a startup than you will be able to do well. As a solo operator, you will be taxed for your time and attention as you fill every tiny role and responsibility. Since it’s only you, none of the jobs will be done with any level of expertise as you will be scrambling from one task to the next.
Having additional partners significantly lightens the load on each partner, allowing them to focus on each task better, and completing them with higher levels of competency. This will be reflected in the final product of your fitness facility!
Everyone has particular things they have been trained in or love to do. Some people love balancing books while some people love coaching and sales. If you bring in partners with skill sets that compliment your weaknesses, you will be building a team that can excel.
If you couldn’t edit a photo to save your life, but your business partner is a graphic designer with retail clothing experience, you will likely have a brand and apparel that is much stronger than your competition. If this partner of yours is an introvert who is not comfortable with sales, but you love people – you take the sales role and let him focus on the back office stuff.
People often gravitate to others for reasons they cannot always explain. Some people like dry humor, some don’t. Some people like sarcastic jokes, some do not. Some people might be more comfortable working with a female, some with a male.
If it’s just you working the the gym, everyone has to work with only you. If they don’t jive with you as they might with another person, there are no other options. If you have partners, your clients can pick and choose who they feel most comfortable to work with, depending on the situation.
Despite all those reasons to have partners in your business, it will absolutely come with some downsides as well.
The biggest potential downside that’s waiting to happen is a life or situation change that one of your partners (or you) might have. These have the potential of being massively disruptive to your business because they can cause a major upsetting of your business and there’s no way to predict they will happen.
Such changes might be the birth of children, going back to school, changing careers or taking new jobs.
If these types of changes happen without proper forecasting and planning, it can cause a considerable amount of stress in your relationship. It might cause distrust, and likely will adjust the balance of contribution made by partners.
As roles are defined and work is being done in the business, it’s very likely that all the work cannot be divvied up to be exactly fair between the partners. In this case, if it’s not addressed and agreed upon, resentments can form.
This can happen in the case of using people in roles that best reflect their abilities. Say you are a great social media marketer and blog poster and you spend 10 hours a week doing this. Your clean-freak partner picks up janitorial efforts to counterbalance this. If he spends 20 hours a week cleaning, he might quickly resent the fact you have a position is takes less hours and does not require cleaning toilets.
One potential area of issue is in the distribution of profits. Unless specifically carved out in your operating agreements, it’s a rule of thumb that everyone is to receive profit distributions equal to the percentage of money they put into the business.
Thus, in the example above, if someone is putting in a ton of time and energy into the business but didn’t contribute much of the up front money, they might find themselves in a weird situation where they’re not entitled to fair profit distributions.
There’s no faster way to ruin a partnership than to not live up to the agreed or assumed “fair” distributions of profit.
Over the years of doing business, there’s a chance that trust is eroded or ethics come into question. Similar to any marriage, once trust is compromised, it will strain the very fabric of the relationship.
Often, once trust is broken, actions are taken on both sides that further damage this trust and a quick downward spiral can ensue.
Another common point of contention with business partners is in decision making. Often times in bad situations, the relationship has deteriorated to the point where people are resistant to decisions being provided by someone simply because their ego is getting in the way.
Nothing will cripple a business more than ownership who cannot come to agreement on business decisions that need to be made.
When you go into business with someone, you’re taking them as a partner, good and bad. Whatever your partner does that exposes the business to liability will similarly expose you.
For instance, if you partner continually forgets to clean up the gym after group classes, and someone trips over a kettlebell and injures themselves, your business is at risk. If you neglect to get waivers properly signed for new students, you are putting your business partner at risk.
When it comes to deciding if you should have a partner, you should start by looking within. Since you cannot control any of the thoughts or actions of your potential business partner, you have to look at things from the lens of what you can control: your own thoughts, feelings and actions.
If I had $10 for every time I’ve heard this and seen a friendship and business dissolve in one fell swoop.
A partnership is basically a marriage. Once you enter into it, it cannot be easy undone without some headache and heartache. Especially once ego gets involved.
Just because you’ve known someone a long time does not mean you know how they’ll react if things start to go sour.
Do they have an ego?
Are they the type to always do their part and then some? Or do they prefer to let others pick up their slack?
Are they selfless or selfish?
Are they honest? Would you trust them in a room with all your money in cash?
Can they communicate their feelings and needs like an adult?
After answering all those questions, answer the same (honestly) for yourself. Then try to decide if any of the shortcomings on either side can be worked through.
Sometimes a weakness of one person plays into the strengths of another, so it might actually strengthen the partnership. Other times, there’s simply no getting past some flaws.
Take a look at all of those potential cons to having a business partner. Answer honestly how you would feel if any of those were abused.
What would you think if your business partner decided she needed to go back to school or have a baby, severely impacting her participation in the business?
How would you feel if you caught your business partner skimming some money without letting you know?
If your business partner always debating every problem solving approach you take, what steps would you take?
If you analyze potential worst case scenarios, you’ll have a better idea of what you need in a partner.
This is where things like a good business plan and partnership agreement comes in. Settling potential arguments while all of the partners are cool and level headed really helps. Trying to figure out a path to resolution once everyone is upset is a dangerous path. When setting up your partnership make sure to cover all the key areas that potential disagreements can pop up.
Also, make sure everyone is on board with being honest and communicative through the process of owning a business. If communication and honesty breaks down, things will go south really quickly.