October 29, 2004
Jack Covert Selects: Jack Covert Selects--The Partnership Charter
Partnership Charter by David Gage, Basic Books, 260 pages, $17.50, Paperback, June 2004, ISBN 0738208981 I have to admit I found Partnership Charter completely by chance. I was going through a stack of galleys I received and opened the book to its Table of Contents. The first chapter called "The Rewards and Risks of Going Into Business Together" caught my attention and I decided to read on. These three points struck me as I read through: 1. Researchers from the Center for Study of Entrepreneurship at Marquette University investigated a sample of nearly two thousand companies and categorized the top performers as 'hypergrowth' companies and those at the bottom as low growth companies. Solo entrepreneurs founded only 6% of the 'hypergrowth' companies. Partner founded a whopping 94%, and many of those had three or more founders. 2. In a poll taken a few years ago, Inc. asked businesspeople if they thought partnerships were a bad idea. Two-thirds of the respondents said they were. When asked why, the majority said they disliked co-ownership because of the partners' 'inevitable conflicts' and 'unmet expectations'. 3. Business school could teach students how to minimize the risk of partner disputes, but they do not. They are schools of business administration. They teach students how to run large companies. Although they have started to do a better job of teaching students how to be entrepreneurial, they teach next to nothing about how to be a partner. Because most business schools' graduates who start their own businesses will have real partners some day, the school's neglect is hard to fathom. But business schools are not the only schools with this gap in their curriculum. Medical schools train physicians without regard to the fact that the vast majority of their graduates will have to struggle sooner or later with partners. The same is true of other professional schools." I think all three of those are very compelling points. Entrepreneurs have a better chance of being successful if they partner with others, but many don't even consider it because of the potential problems. On top of that, there is no place where people are trained to work together well as partners. That is where The Partnership Charter comes in. Author David Gage talks about everything from roles and titles to ownership issues to the importance of understanding personal styles. The most important chapter in my mind is one on scenario planning. Gage lays out questions that would be easy for one entrepreneur to answer, but could be a nightmare for three or five people to agree on. What happens if one partner hires a key employee whom the other partner(s) dislike(s)? What happens if the company receives an unsolicited buyout offer from a competitor? What happens if the partners decide to close the business and the company has nothing but debt? I recommend this book for ALL entrepreneurs. After reading the book, I think more people will consider partnerships and if they do, The Partnership Charter will give them a blueprint for creating a successful one.