I sense a long article coming on. This happens with me sometimes as things rattle around in my brain, and if I don’t write something—often something snarky—it haunts me to the point of distraction. As someone who has always been rather opposed to most RFPs, I have found myself writing up umpteen proposals of late and suddenly scouring the online RFP bid websites looking for that next project.

And I know I’m not alone as one peice of work we recently won had 70 respondents (let me spell that for you in case it wasn’t clear: SEVENTY). Hey, if this is what we have to do to differentiate and win work in this crappy economy, then so be it, but It’s  frustrating how inconsistent and poorly constructed most RFPs are. Grrr.

That reminds me, a little while ago the smart folks at FunctionFox called, asking for some thoughts about how design firms can not only survive, but thrive in a recession for an article they were writing called “What You Really Need to Run Your Business During Tough Economic Times“.

We discussed staffing, sales, culture, and how to right-size the team to keep things manageable. This often means responding to things like RFPs, but even moreso, it means that each member of the team needs to understand where they fit into “the machine” and contribute. From cleaning the office ourselves to help quote projects and write up RFPs.

Heck, to survive in business—especially in the design industry—means making some tough decisions and hard hard work for everyone. That might mean letting someone go, or cutting back on some of the more luxurious items we’re all used to. But keep your pants on and your eyes on the goal.

What did the English say during the war? “Keep calm and carry on” wasn’t it? We’ll get through this.

Choosing the right partner to expand your design business can be just the thing you need to survive and grow, especially in these uncertain economic times.

Recently we published a short article about partnerships which was well received, leading our friends at FunctionFox to asked us to create a more comprehensive presentation called Partnership: Choosing the right person to expand your design business with and host one of their popular webinars on February 12th, 2009 at 11am PST. We’ll try to jam all our thoughts into a concise 30 minute presentation followed by a 15 minute Q&A session. You can view our webinar online at FunctionFox’s website, and below is the text version of our presentation:

“Some animals mate for Life”
In business, mating for life isn’t usually the case. And love rarely comes into it. Tricky business finding a partner. So the plan today is to delve into the topic of when it’s time to pursue a partner and how to choose the right person so your design business can grow. Identifying and selecting this person can be fraught with complexity and choosing incorrectly can ruin your business, not to mention your relationship with that person. Choosing well can be a brilliant move. Even then, it may not be for life, but certainly will be a more positive experience.

“A partnership is like marriage, in that like marriage they ought to make it as hard to get into as they make it to get out of.”
This article started out as a sole proprietorship, just one person’s thoughts on the subject of taking on a business partner, specifically in the design industry but really good advice for anyone. It was a decent article; informed and informative and generally well written. But the author thought it could be better so he sought a co-writer and effectively formed a partnership. In doing so he gave up complete control over the content and the end result, probably figuring he’d either have not much more work to do on it as his new partner took the reins, or that he might be in for a couple debates on its direction before it was finalized. Or, totally regret the decision and have to figure out how to wrest authorship control back.

Before you read on, know this: the resulting advice you are about to read now comes from a partnership. We collaborated on its creation much as we’ve complimented each other for the past twelve years in the running of our design firm. Some of this information we’re going to share may seem like common sense. Some of this learning came via the business degrees that we both hold and our creative backgrounds, but mostly it’s been from working together as partners, the triumphs and mistakes we’ve made over the 12 years we’ve been in business together. We’ll share our perspectives and advice for design professionals considering a business partner. We don’t have all the answers, but we’ll try to cover as many of the angles as we can based on our personal experiences—including our own failed third partner attempt.

“Ask yourself, ‘Would I marry this person?’”
Let’s assume you’ve made it though design school of some kind and now have  achieved relative success growing your small design practice into a viable business under your leadership. You’ve looked at the numbers, evaluated the industry and it’s time to expand to take your business to that next level. You think the way to do it is to get a business partner. But where do you start? What do you look for in a candidate? And when you find him, what then?

Despite the faith business clients often place in designers to build brand strategies on their behalf, the irony is that designers often do not possess adequate business acumen to run their own companies. Talk to any designer that runs his own operation and you’ll hear the same stories about getting “burned” by clients because he learned the hard way that you have to take care of the business side of the relationship before the creative one. The same thing applies to establishing a healthy partnership.

A design practice can be profitable and growing for years, yet all could be lost in a short period of time with one bad client, or an inappropriate choice of partner. Don’t be blinded by the desire to partner with someone who appears brilliantly talented. He may be, but he may also wreak havoc on your business for a variety of reasons. The cultural and financial benefits of finding the right partner can be amazing and rewarding. The price of a bad choice will, at minimum, be felt for months or years afterwards, if the business survives.

There are numerous reasons why a business owner would take on a partner. Besides sharing leadership, management and administrative duties, a partner shares your financial risk and responsibility. But this is rarely the reason a design professional jumps into a partnership. The primary motivating factors should be the potential for expanding the company’s capabilities and growing the business.

Rather than pontificate on the merits and pitfalls of partnerships from only our perspective, we asked a number of respected design business owners what their views and experience on the matter are. This is a diverse group of people coming from completely different backgrounds. All have been or are still in partnerships—some successful and some incredible failures.

“Think about it, if you were a figure skater, you’d want to make damn sure whomever was going to catch you actually can.”
The beauty of an effective partnership is that you are working together with the same incentives—a share of ownership in the success of what you are building together. Two really can be better than one. In the absence of a lot of cash to offer a person with the expertise you need, a share of the business may be the way to go—especially if he brings his existing key clients, vendors and staff with him.

From another perspective, you are creating a great efficiency by merging the cost structures of running two separate businesses and keeping all the revenue from both. In many cases when you only look at a prospective partnership from that angle, it looks very rosy indeed.

Ask yourself this though: Do you really need a partner to achieve your goals? Can you hire someone to help you and work out some other form of profit sharing or compensation without sharing control of the company? It’s an option worth looking at. It may seem like you are paying him too much, or more than you can afford at the moment, but partnerships—especially those that fail—can be even more costly.

“One major factor of our failed relationship was that we had no mission statement when we started.”
Understand what a partnership is. You don’t need to technically do anything to form a partnership except declare one, but let’s be straight here; if you don’t do your due diligence, openly discuss both sides’ intentions, and agree to all aspects of the business structure, ownership, responsibilities and profit sharing in writing, there is a high likelihood of misunderstandings, mistrust and ultimately failure.

Have a business plan to serve as a foundation. Without a plan, you have nothing. What do you provide? To whom? Analyze your situation and do a SWOT analysis like you would for any of your client projects. What are your individual strengths and weaknesses? What opportunities and threats face you personally and your company? This will go a long way to answering the question about whether a partnership is a good idea. And once you find the potential new partner(s), repeat this process all over again for all parties.

“Don’t be 100 percent sure, be five hundred percent.”
There are numerous risks to entering into a partnership too. Beyond the emotional stress that can occur, or risks of giving someone else access to the assets , finances and proprietary information of the company, the wrong choice in a partner can ruin a firm’s reputation. Remember, not only the company’s, but your reputation will now be tied to his. Your colleagues, past and potential clients and employees, and the entire industry will likely judge you based on this new relationship.

If your new partner is talented, well-known, respected and professional, this will be a wonderful public alliance. If he’s not, then you might have a major image problem on your hands. Oh, and keep this in mind: your partner has the same thing on his mind. No more raunchy behaviour at client parties, unless you both agree that your reputations will be damaged if you behave!

“No one said anything to me about this person until after it was a done deal. I should have been more assertive in my lines of questioning.”
Look for the best fit and investigate your prospective partner’s experience, history and reputation to determine if he has indeed done what he claims he can do for you. If you are seeking a senior creative professional with management and leadership abilities, verify he has been successful with this in the past. You don’t want to find yourself partners with someone you expect to build your team and guide the creative and production process only to discover that he is best suited to working autonomously.

Regardless of what he has told you, Google your potential candidate. What has he done? What is his reputation? Talk to former employers, clients and employees—happy and more importantly, unhappy ones. This might be harder to do if the person is coming from another city, but that makes it even more important. Why is he really moving?

Don’t skip this step. Many failed partners we spoke with admitted that if they’d only spent more time doing due diligence in this area, they would have uncovered serious doubts and concerns over potential choices for potential partners.

“Not to say going into business with friends is a bad thing, but I think we all wandered into it with more optimism than realism.”
Just because you like someone, worked well with him at school, or are related to him is not a good enough reason to get into business together. There are exceptions of course, but along with the usual risks, going into business with a chum or relative can turn into both a volatile and caustic work situation that can also destroy your personal relationship.

Something else to consider is if there is a pre-existing friendship or relationship between some partners but not all. It will undoubtedly be difficult for a new partner to feel truly a part of your team right away. Your partnership should based on goals, skills and strategy, not merely on being social friends. It’s been said many times before, but a partnership is a fast way to lose a friend forever.

“We’ve been very fortunate to have had a partnership last as long as we have (20 years)…largely due to the fact that we have complementary/contrasting personalities and aptitudes.”
Imagine trying to run a marathon with a pebble in your shoe. At first it might just be a little annoying, but after a few kms…

As a designer, consider your styles and approach to problem solving. Are they compatible and complementary? As important as whether your personalities ‘fit’, your design backgrounds, aesthetic preferences and methodologies must be considered. Will there be a power struggle? How well will you collaborate? Who gets to make the final call on a design or production choice? Will this anger the other partner and make him feel undermined or disrespected? If not carefully considered, a bad ‘fit’ can grow from a seemingly little thing to a major problem and source of stress.

“My mistake was going into business with a partner from a different background.”
There’s a well-known adage that a partnership is like a marriage, and it’s true. In his article Good and Bad Reasons for Having a Partner, John Burton put it best when he said that “like marriage, they ought to make it as hard to get into [a partnership] as they make it to get out of.” Make sure you’re comfortable with each other before moving in together.

Don’t rush into a partnership. Once you’ve identified what you deem to be a good candidate, be patient. It’s not always easy, or possible, but consider creating a working relationship that allows you to work with one another for a while. Of course, you might have already been doing so which led you to both conclude a partnership might make sense.

Take it slowly. If your potential partner is unwilling to be patient, then you have your first clue that something might be awry. If you’re married, or even in a committed relationship, consider how long it was before you took those critical steps in the relationship.

“As much as I hate lawyers, I love them too.”
Yes, lawyers are going to cost you some money, but think about it: as designers we’re constantly telling our clients to leave design to the professionals; so leave the law to lawyers.

Find a corporate lawyer you like who has experience in partnerships and get him to draft up the official shareholders agreement for you. Don’t skip this step! There are even consultants that specialize in helping small businesses expand or transition with issues such as partnerships. Find one and let the experts help guide you.

Likewise, use an accountant and lawyer to establish valuations and share structure and create a shareholders agreement (SHA). There is no one way to do this and really the only important thing is to agree on amounts, ownership structure, timelines and make sure both parties are comfortable.

“The legal agreement we had in place saved my ass.”
You know, they didn’t have enough life boats on the Titanic and look what happened. Design management consultant and speaker David C. Baker warns about what he calls the “Five Ds”: divorce, death, disability, dismissal or departure. What happens when one of these occur? It’s crucial to be prepare for the worst.

In your SHA, include provisions for an exit should you, or your new partner, ever want out—whether it is amicable or not. So do you dive in or wade into the partnership? One school of thought believes that having a trial period with a short term exit plan will actually hinder the progress of the partnership and reduce each party’s willingness to really give it their all. This is an area where you have to make your own decision because there’s no one right way to do it. Do what’s comfortable for you both and realize that the focus of the relationship should be long term.

“Another contributing factor to the demise of our partnership was we had too many chefs in the kitchen. Three designers, each taking on the creative director role.”
Even if you are bringing complimentary areas of expertise into the relationship, it’s important to establish well-defined roles and responsibilities that disseminate the various aspects of running the business such as marketing, sales, finances, management and who is primarily in charge of creative leadership. Even if creative duties are shared by the partners, understand how to deal with situations when one partner disagrees with a choice or direction on a project.

Here’s an old one: So, how many designers does it take to change a lightbulb? ‘What…change it again?? I’ve already changed it six &$#* times!”

Mixed direction and inconsistency can be a huge cause of stress and difficulty within your team. Hence, the importance of partnering with someone with a compatible design style and creative process, and in establishing responsibilities so the culture of the creative team is not undermined by bickering or disagreements between the partners.

As much as conflict resolution should be a part of your written SHA, make sure you have also articulated in writing outside of it how these things are handled on a day-to-day basis (hint: well defined job descriptions are a good place for this). If you are constantly reaching for the SHA to sort things out, the partnership is likely doomed.

“Going into business with someone is serious stuff—do your homework and solicit input from trusted advisors.”
Not all designers have the advantage of a business degree, but that’s no excuse not to do your homework and continue learning how to better run your business. Every community has a Board of Trade who may be able to help guide you. In Vancouver, we’re fortunate to have a small business resource centre located in Waterfront Centre. http://www.smallbusinessbc.ca/ And of course designers have their professional associations, such as The Society of Graphic Designers in Canada and AIGA in the US—each filled with experienced design professionals with advice to give.

But don’t just rely on reading materials or the advice of strangers. On of the best ways to grow your business is to find yourself a mentor you respect or even form a small group of advisors—your Board of Directors as it were. Share all the information with your most trusted advisors and solicit their input before making any radical decisions. Heed their advice, but remember that people give away opinions like they do kittens, so in the end you need to make the decision for yourself and be willing to live with it.

“I wish I’d listened more intently to what my heart and gut was so obviously screaming.”
If something doesn’t seem right to you, it probably isn’t. Body language and listening as closely to what is not said are important cues that will give you a better sense of whether things feel right. If there’s something you can’t quite put you finger on, dig a little harder, it’s likely that something will rise to the surface eventually, better before than too late.

In addition, consider that the person you may partner with has his best face forward as you work through the details during the courtship phase. If his behaviour is less than exemplary, then there’s good indication that it won’t get any better as time moves on. It might also show you how he will react when dealing and negotiating with clients.

“We wanted to be sure the new relationship was solid before making a formal announcement, but by then we were getting calls from people asking us about it.”
Any senior designer you chose to partner with will bring with him a portfolio that predates your working relationship. Carefully consider how his work and yours will integrate as you seek new clients together. Moving forward, it’s best to be transparent with potential clients about the work you both did before the merger.

Of course you’ll want to announce to the world this new partnership. Timing is important. You’ll want to make sure you wait just long enough to ensure it’s a solid relationship, but also not too long that it’s old news.

It’s also important to consider the language you use to announce and describe your new partnership publicly. Make sure all partners agree on the story and language to be used to describe the change in the business structure so it best represents all sides.

“Anyone can run a company when times are good. It’s in difficult circumstances that great leaders are measured.”
In an attempt to summarize this complex topic, it’s best to go back to the beginning of this article. At various stages during the process of establishing a partnership keep asking these questions: Do you really need a business partner? Do the potential benefits still outweigh the possible risks? If the answer remains yes, keep going. But never hold off asking and dealing with the toughest questions at the start out of fear that the person will take offense or kill the deal. If this happens, consider it a blessing and keep looking.

Find a like-minded professional that brings something to the business—someone you want to be in business with for the long term. Commit to the relationship as you would a marriage. But do your homework. Going into business together has proven to be a great move for us and it can be for you too, just take the time to find that special someone.

Summary:

• Be honest with yourself about your business skills
• Understand what a partnership really is
• Analyze the situation thoroughly from all angles
• Recognize the risks
• Investigate the candidate thoroughly
• Resist the urge to work with friends or family
• Consider fit, style and approach
• Don’t rush into things
• Consult a lawyer and accountant
• Create a shareholder agreement
• Define roles and responsibilities
• Consult your mentor or trusted advisors
• Determine conflict resolution
• Listen to your gut
• Commit as you would to a marriage

For more information about this or other webinars, visit FunctionFox’s events page.

We’ve used FunctionFox‘s TimeFox web-based time and project management tools for years and love it. Their new TimeFox Premier release has added handy functionality such as task management, to-do lists, calendar and scheduling tools, timeline overview, project blogs, email alerts and iCal integration—things we’d been hoping and asking for for sometime.

But that’s not what this post is about.

FunctionFox also regularly publishes a great newsletter and resource centre on their site containing terrific articles about issues creative professionals and firms face on a daily basis. For example, they recently posted an article entitled Balancing Your Business by Heather West that examines issues such as how many clients should you serve? In what categories? Or where?

As a small, but growing agency ourselves, we find we need to regularly re-evaluate our client mix and clarify our understanding of who our ideal clients are. It can be tough, but deciding when its time say no to some clients and good bye to others is a crucial step in growing your business and focussing on what you’re good at, what makes you happy and what makes you profit. This informative article shares some wisdom on this important topic that we should all take to heart—I know I do.