#3: Should You Start A Business On Your Own Or With Partners?

Sam: Hello and welcome back to another episode of the lazy entrepreneur. Today i am going to be doing something a little bit different from the other two episodes and I’ve got emma my wife here with me. Say hello emma. 

 

Emma: Helloooooo

 

S: what I’ve found doing the other two episodes is sitting in front of a microphone and talking is pretty difficult. It’s much more difficult than it looks. It turned out I wasn’t very good at it and came off a bit wooden. And although I think the content of the two episodes was good, the delivery was pretty flat and it took me quite a long time to do it, and possibly worse, is that I’ve been putting off doing another episode ever since because it is difficult. So after a few suggestions and few emails from readers and listeners, having someone else to bounce ideas off and chat things through and make things flow a little bit better. Let’s try it, let me know what you think. 

 

S: So today we’re going to be talking about partnering with other people when starting a business. So Emma is here because she is both my partner in life but also in business. And we run the business pipehouse gin together, which we’re doing with another couple. Pretty much all of the businesses that I’ve started I’ve done with other people. The one exception being my blog and consulting business. But the rest of them I have either done with one other person or two or three other people. With varying success. I’ve had ones where having a partner definitely made it better and together were more than the sum of our parts with the different skills that we brought to the table and it ended up being worth far more than if we’d do stuff on our own. And i had other business where there was a real imbalance on the amount of work that people were putting in where things grind to a halt because decision making takes ages. And then I’ve also had ones where partners had fallen out and turned what was quite a successful business into one that had to close down. So it’s not an easy question to answer. It’s not easy whether to answer it’s always better to do a business together or just yourself. So that’s what we’re going to talk about today. So Emma, how are you finding Pipehouse Gin? 

 

Emma describes her experience with Pipehouse Gin [02:42]

 

Emma: I’m quite enjoying, I like that the product is very exciting for me. And doing it with friends and family has been quite a journey (laughs). 

 

S: I’ll take that as both good and bad.

 

E: Yes.

 

S: So you’ve actually got another business that you do yourself. Pipehouse Gin is a self-explanatory Gin Business, but Emma also runs another business that she does herself called Emma’s Nomad Kitchen where she does supper clubs. She invites people into our home, cooks a three course dinner, and charges them for a mini restaurant that happens every couple of weeks. So have you found that to be quite a different experience, working with other people vs. having all the power and control yourself? 

 

Emma talks about having business partners vs. being a solo owner [03:27]

 

Emma: Yea definitely, I think at certain phases of Emma’s Nomad Kitchen, I relied on you quite a lot in terms of brainstorming ideas and in terms of the logo and the name and in terms of how I set up the business on the commercial side. So in some sense we kind of worked together on that, but the day to day running of the business was 100% me and I love that because I have complete control and creativity over how often I run the supper clubs, the menu, and the people that come along so yea I really enjoy that and actually reflecting back on Pipehouse Gin vs. Emma’s Nomad Kitchen, I’ve really enjoyed having my own business alongside a business that we’ve been working on with other people because there are decisions that I can make instantly and I have control which I’ve really enjoyed. 

 

S: Yeah I can see that. I mean that’s one of the biggest issues with owning a business and then having partners, especially if it’s your baby, you’re giving up control of it. Especially if it’s an even business where you’re taking an even share, which is how all my businesses have been done, it is possible for one person to have overall control and then a bunch of partners. But if anything I think that makes it even more complicated. 

 

How is Pipehouse Gin structured? [04:57]

 

 So with Pipehouse Gin, there are four of us, four decision makers. We have a meeting once a week, which we sometimes miss, so sometimes it can be two weeks where kind of all the decisions get made. And that can really slow things down. Especially if we get to a meeting and find that we can’t reach a decision at that point, we get our way of thinking about it and come back again in a week or in two weeks and try to make that decision. We started Pipehouse Gin in september 2017, so just over a year ago, and we launched our first product in June. Now if I had been doing that on my own, would the product have been out a lot quicker? 

 

If Sam had started Pipehouse Gin alone, how would that have changed the product? [05:37] 

 

E: Yes! Definitely. 

 

S: YOu think it would be?

E: But it would have been a very different product;

 

S: I Think so too. It would have been a different and much worse product. This is one of the advantages of having partners that you have different skill sets that balance out each other. And just because something is slower does not mean that it’s worse. I’ve quite a good enough attitude to products, design, business, where I value sort of speed and getting stuff out there over polish and quality. As you can see with these podcasts where I am trying to crank them out as soon as possible whereas some of our other partners, like Katie who was an art teacher before doing this business is the complete opposite. She is a 100% perfectionist, and if she was doing it on her own, the product would have never been released. If I was doing it on my own, the product would have been released very quickly and would not have been as good. And then kind of bashing heads a bit, we’re able to get something that actually has both really good polish and which we…

 

E: And is commercial.

 

What are the advantages of working with partners? [06:58] 

 

S: Yea and actually have a product that made it out there. So let me talk a little bit about the advantages of working with partners and how they kind of work for  me. So the first one I put down is accountability. It’s the lazy entrepreneur and I call that because I struggle with motivation. I need to be excited about something in order to get up in the morning and go and do it, but on the other side of that, I am also a people pleaser. I don’t like letting people down, so by having a partner that I make promises to, like I will have this done by this date, even if I’m not feeling like it, I’ll get up and go out and do it. So accountability is quite a big thing. Even just having the accountability, like I know we have a meeting once a week, if it was “plan a new meeting when you feel like it,” we’d probably never meet. But it’s once a week and everyone knows its happening and Emma books it in my diary without telling me and so I turn up in the morning and you’ve got a pot of coffee and about half way through I am really into it.

 

E: Once you’ve woken up. 

 

S: So accountability is a big thing. But for you maybe that isn’t such a big point because you are quite self motivated already. With Emma’s Nomad Kitchen, it doesn’t take much for you to spend a few days planning recipes and trying out new things in the kitchen and doing all the preparation. I have never seen you putting it off, that is for sure.

 

E: Yea definitely, that is because I really enjoy it. I think that there is only one element to it that I hate doing, which is ironing the napkins. And that is the thing I put off all week. So I think that shows how much I enjoy the whole business because I always make time to do it and I enjoy doing it. 

 

S: So what about with Pipehouse Gin, because you’ve got one of the less fun roles in Pipehouse, where you are responsible for emails and following up with people, chasing them and paying invoices. YOu are responsible for a lof the sales, going around to bars and restaurants, flirting with the barmen, trying to get them to buy the gin.

 

E: Is that what you think I do?

How does Emma feel about running one of the “less-fun” parts of Pipehouse Gin? [09:15] 

S: What about with that? 

 

E: Well I really am a people person so I like meeting new people and building relationships, so whether it’s through emails or in person, I enjoy meeting people in the food and drink business. And also that is part of the business that I really enjoy. So to you, although it looks like I spent loads of time doing admin, chasing people down ,emailing them , I really enjoy the end result and I think I am quite good at the admin side of it. So it’s something that I just run with really. 

 

S: Another advantage of doing business with partners is that you have different skill sets, especially if you pick your partners wisely, then you end up with a really good sort of team. Which I think we’ve proved with Pipehouse Gin. We’ve got Katie who is a designer and artist, who’s taking the photos and doing most of the photos and branding and runs our instagram account. We have Emma, who is very motivated, puts in tons of hours, probably double what the rest of us put together all do, is very good at staying on top of the emails, going out there and meeting people, doing all the stuff which, say, Katie and me, who are much more introverted would find torturous. Going and walking into a strange restaurant and asking to speak to the manager and trying to convince them to buy our gin. I would find that really difficult.

E: Yea and then I try and convince Sam to take me back for dinner. 

 

S: Yea you find all the best places don’t you.

E: Yes. 

 

S: Whereas me and Ben, we’re quite good at strategizing, bigger picture stuff, we’re also very just go and do it. So we both have a history of starting lots of different businesses and have a lot of experience with all the minutate and the financial side of this whole thing. And I think this works quite well and I think it’s better than anything any one of us could have created on our own.

 

 

E: And I think a good example of that is the numbers. Whenever there is something with numbers, you and Ben are pouring over it, and me and Katie are kind of like half asleep, half talking about something else. But that’s the good thing about working in a four, that actually me and Katie don’t need to understand the real detail of the numbers, obviously we need to understand the headlines, but that’s the good thing about working in a team. 

 

What are some benefits you get with partners that you don’t get when you contract work out? [12:18]

 

S: And one argument people use is that you could hire people to do these roles, but the nice thing about having a partner is that they are invested in the business. They have as much buy in as you. If you have to hire an accountant and speak to them every time you’re going through numbers, not only would it cost a fortune, but how would you know if you’re getting good advice? If you don’t have a good starting point…they’re not invested, they kind of are but they’re more invested in getting their fee. They’re not so invested in having their business work out. I’ve spent a lot of time looking at spreadsheets, thinking about how we could change the margins and save money or whatever, and likewise, if you hire a designer, you get some quick cheap designs churned out quickly, or you get Katie who spends hours thinking about and working on and trying different designs and taking pictures and learning and doing research about what the best most affordable photo sets are for the business and all that kind of stuff. 

 

E: Well yeah, she’s taught herself to be a food and drink photographer int he past year, which is not a skill set she had before. 

 

S: ANd if you had to hire someone to do that all the time… so one of the things we do at Pipehouse Gin is we have bars that stock our Gin, we’ll go around and photograph in there so we get some good marketing stuff that they can use and that we can use and if you had to pay a photographer every time you did that it just wouldn’t be worth it… it would cost a fortune. But she is invested in it. And yeah we could hire a salesperson to go around to each of the bars and restaurants, but again, you have buy in when you talk to them. When you talk to them they know you’re an owner, that it is your baby, they’re much more likely to buy because they’re supporting you and a local business as opposed to just some rep coming around. And as we expand, if we get to some point where we’re hiring other sales people, you will have done it yourself, so you can train them out, you can go and monitor them, whereas if you’re just hiring a sales guy out of nowhere, how do you know they’ll do a good job? You don’t have a benchmark for what they’re meant to be doing.

 

S: And another advantage is you have people to bounce ideas off. So I think of myself as quite an ideasy sort of person, I am quite creative. But some of my best ideas come when chatting to people, when I have someone to rant at and talk about my ideas and they can give a little comment and that will make me think of something else, and then they will, and then together we’ll come up with a better idea than I would have come up with on my own. And I just find that when talking with other people about ideas and the exciting stuff we can do with the business, it just makes me more excited and means that I’ll go away and then think about more things on my own or have that motivation to do other stuff. 

 

How does having partners in business benefit your well-being? [15:37] 

 

S: So these are kind of the three, really practical reasons to do business with partners. I’ve got another two which are more kind of for your own welfare. So the other thing is if you’re self-employed you spend a lot of time on your own. Spending all day every day on your own working hard with your face buried in a laptop is not good for you, it is not fun.

 

E: And it’s not very productive

 

S: And it’s not very productingge. Whereas if you’re doing business with friends and partners, it just makes everything more fun. Having people to talk to. We’re social animals, I think it’s just a good thing. Before Emma was doing Pipehouse Gin and Nomad Kitchen, she was doing freelance marketing and you found sitting there writing proposals all day on your own torturous. 

 

E: Yea

 

S: And I found it difficult as well because I’d be in the zone working and you’d always be trying to talk to me.

 

E: Yes because I like to chat when I work.

 

S: Yeah, which is fine if we’re working on the same thing and the chat is work related but when I’m doing something completely different and I keep getting interrupted, it doesn’t really work and you enjoy it very much because you were doing something that wasn’t too fun anyway. 

 

E: Well I think that the business was for money, not because I enjoyed it. 

 

S: That is true.

 

E: And I think that’s the biggest difference from Pipehouse Gin and Emma’s Nomad Kitchen. I love doing both of them. Whereas marketing was just a means to an end.

 

S: That is very true, and I suppose, one advantage we have is that we’re both self-employed, so we’re married and we live together and we spend all day together. Whereas if you live on your own, or if you’re married and your spouse works, then you’ll spend all day on your own. Which would drive me crazy. 

 

E: It would drive me crazy. 

 

S: So before we married and before we met, I was self-employed and lived with friends who I was doing business with, so I was never in a situation… I don’t need much human interaction, but if I was on my own all the time, I would. And I think I’d find that quite tough. So we talked about some of the advantages, and we have a list of five there, accountability, different skill sets, people to bounce stuff off, lonely if you’re on your own, and its more fun with friends. Let’s talk about my much longer list of the disadvantages. 

 

What are the disadvantages to working with partners? [18:46] 

 

So the first one I want to talk about, which I think is probably the most important in terms of if you don’t understand this going in, then you’re going to find working with partners very very difficult. And that is that there is always going to be some sort of imbalance in contribution to the business. And contribution to the business can come in many different formats, that can be kind of hours put in. Someone is almost certainly going to be putting in more hours than other people, even though they share the same amount of business, they share the same reward. There is always going to be someone who came up with the original idea who might have thought of that great new thing you could do which turns out big and really successful. There’s always going to be someone who is responsible for more of the sales, more of the revenue. Who’s brought in the business, and without them, the business wouldn’t be where it was. And there is always going to be an imbalance in contribution from a success point of view. You’re all doing different parts of the business, and you spend a lot of time working on it and it goes nowhere. But on the other side, someone is putting in the same amount of work and effort and actually succeeded. And because there are all these different types of contribution that you’re talking about, you’ll almost certainly end up in a situation where each of you are thinking of a different person when thinking about who is contributing the most. That one of you thinks this person, maybe yourself, maybe you think that “I have put in so many hours, I worked so hard, they’re lazing around,” that might be what you’re thinking. 

 

E: Noooo. 

 

S: Whereas, the other person might be thinking, “ Well I came up with the original idea, I thought of that, I had that one contract that made our biggest contract that made the most amount of money, and that could lead to a lot of resentment. And I think people getting bitter over contribution differences in partnership is where a lot of people end up falling down. Which should happen in many different ways. 

 

How do businesses with partners break down? [21:17]

So one way it could happen is that you get resentful because you think you’re contributing more so you start putting in less work. You try and even that imbalance by doing less which, as you can imagine, is a slippery slope. It means the business will do worse, which is worse for all of you. It means other people will see that you’re putting in less work and then they might follow suit and put in less work, they might get bitter towards you. They might think they’re the bigger contributor or whatever. So, the reason I have highlighted it is to show there is always going to be some type of imbalance, but that isn’t always a bad thing. That is one of the unique points about a business that you’re doing with partners. Is that you’re all doing different roles and you’re all contributing a different amount. Yes, if you have an imbalance where one person is doing all of the work and the other person just never turns up to the office, that is an issue. But that is not really what I’m talking about. I’m talking about where you’re all working at it and some people feel they’re doing more than others. I don’t really have a good solution to this problem. But that’s just to say that’s how it works, that is what business is like and you have to get over it. It shouldn’t affect how much work you’re putting in. It’s something that’s better to talk about than to try to resolve yourself. But either way, you need to be aware. It’s never going to be 100% fair. Especially when we’re doing a business… One thing we might find is if you’ve had success with one partner in one business, you’ll probably go into business with them again, which case in point is Ben who is Katie’s wife who we’re doing Pipehouse Gin with. So we have three different businesses that we work on together where we’re partners in and we’re together, some businesses I do more work on, some he does more work on, but when I set back and look at the entire picture, yeah we’re all contributing quite a lot to those businesses. 

 

Thoughts on working with the same partner on multiple businesses [24:03]

 

And I think that even if I went back and got out my excel spreadsheet and calculated contribution amounts, I might find an imbalance somewhere, but then maybe in three years time we would have done something else or one day I thought I was doing work, at this point in time I might go through something in my life which meant that I wasn’t able to contribute as much. I know that is not going to stop him putting on 100% effort towards businesses. So maybe in three years that imbalance shifted totally the other way. As long as you’re partnered with the right people and you know they’re all committed to the business, if there are these slight imbalances, just get over it and get on with it. 

 

E: So one way we look at contributions in Pipehouse is we look at the numbers that matter to us, say we’ve just started looking at sales per channel. So website, events, trade, and events was something over the summer that all four us focused on, and we were really competitive in terms of sales, because we tended to split the events couple by couple. So you and ben loved comparing how many sales we’d get from that day versus that day. For us, the actual sales of bottles, the results, was kind of how we measured contribution. 

 

S: So moving on, another issue if you’re someone like me, if you’re in a partnership you don’t have full control over the business. If you have an idea, and someone disagrees, you can’t just go ahead and do it. Now I like having an idea and acting on it. And I find it difficult especially if I disagree with people, if I’m being told no. I found this most difficult when I was running a coffee shop. A coffee shop I had a partner, so it was two of us running it, but we also had a general manager who was responsible for day to day stuff. And kind of implementing decisions. And I found that it is very difficult to, because I would often have an idea of something that I wanted to do or a new product line and found it difficult to get buy in from the other people to commit to that. Whereas in something like my blog, which is down to me, if I want to change something on the businesses, or do a complete redesign, yes I can just go and do that that day. So I find that difficult, but we’ve kind of already covered it slightly. Not having control can be a good thing. Especially if you got something like Pipehouse Gin where the brand matters a lot. How it looks matters a lot. If it was just up to me, and I could just say one thing we found quite frustrating when we started was that Katie would not let us, or didn’t want us posting on instagram. And that is because she had a very high level view of what she wanted it to look like. Color schemes, she had a very high quality benchmark for posts. Whereas we were thinking we were at the market, we want people to come down. Let’s just take a quick photo and put it up on instagram. I found that quite frustrating to begin with, and now that we’re a few months later and I can see the bigger picture and where she’s coming from, it was definitely the right decision. If you’re doing your own business, you’d find it really annoying if you had to run your recipe idea through someone else before you could go ahead and make them. It would drive you mad. If I had to get agreement for every blog post I published on my site, it would drive me mad. But on Pipehouse Gin it works quite well. I think it depends on your business. 

 

Further discussion on the disadvantages of working with partners [28:17] 

 

S: So let’s talk about the problem of working with friends and family, is it could put a real strain on those relationships. We’ll be out at a romantic meal and just talking about business related stuff.

 

E: Which is your dream.

 

S: Which is something I really enjoy that Emma is coming around to. If your business is going well and things are fine, the problems come when your business starts going badly. If it starts to put a financial pressure on you and it starts building resentment between each other, and I have seen a lot of people that got into business together or as best friends and now don’t really speak to each other or become quite cold. You do hear quite a lot of stories about marriages breaking down because people have gone into business together. So it’s not something you should take lightly. I think we took it together pretty casually. And I am not regretting it, not yet. 

 

E: But I think the part of that for us is that we are not financially dependent on this business succeeding. 

 

S: That is very true. Yeah, and the way we’re treating this business is very much we’re doing it because we enjoy it not because we want to make millions. 

 

E: That would be a bonus. 

 

S: BUt we’re not planning on taking on an investment or loans or mortgaging our house to pay for it. We’re not planning on using our non-existing kids college funds to fund it.

 

E: And all those things are very stressful. 

 

S: We’re purposefully building a business as least-stressful as possible. Which is kind of the cause of a bumpy experience of doing it the other way. 

 

E: And I think the other way we approach the business is to learn different skills, improve on the things we know we are already good at. It does seem, I guess when I put it like that, more of a hobby business.

 

S: Yeah, so a low stress business. A lifestyle business that we enjoy doing. But I think that even if you’re not officially a partner in the business with your spouse or partner, becoming an entrepreneur and committing yourself to starting your own business is going to put a lot of strain on that relationship anyway. Even you might try to insulate them from direct involvement in the business. It is going to have an impact. You met for lunch with someone yesterday where you were talking about how you know when not to disturb your husband. 

 

E: When you’re in zone, don’t try and break up your workflow. But that took a number of years and quite intense travelling where the two of us kind of spent a lot of time together when we were travelling the world and that was one of the lessons I learned, to get to know the ebbs and flows. 

 

S: If you’re both working 9-5 jobs, that when you’re not at work, that is kind of you time. Whereas Saturday, if there’s something I need to do, I’ll kind of be working on that. If it’s 1 am and I just got into the zone and I am really being productive, I’ll keep doing it. When things are going bad, I don’t really want to go into it. But the last month has been very stressful, and you have been getting a bit of the brunt of that. When I am moody or don’t want to talk or playing bad tempered, and the effect you had on it as well. And affecting your health, yeah. Stress is not good for you. Stress does seep onto the outside world. Especially when your business is you. There isn’t really a work life balance. You can try to build it in but it’s difficult. 

 

The difficulty of finding a work-life balance as an entrepreneur [32:56] 

 

S: You could go for a meal and end up chatting about gin stuff, or when we’re on holiday a few weeks ago, Emma was always checking email because we were getting you orders and I was having to look on through our fulfillment center so I’d ship out the gin to people. So you’re kind of never really off, and that does put pressure on your relationships. All right, I’ve got one last downside to having a partnership, and that is that every person you add to your business means a smaller share that goes to you. 

 

E: Yeah.

 

S: So if you 100% own your business, all the money earned goes straight to my pocket. On another business, where I’ve been a third partner. If the business makes 100,000 pounds, I’ll get 33,000, or 25 after the government takes their cut. Each person you add in as a partner adds complexity, slows it down, gives you less control, and means that any money it makes goes further. So I spoke that often you get a case where partnering up with people means that you produce more tan you would have done individually. BUt it also means that you should be weary about growing your partnership too fast. Two is okay, three of you, your portion is getting smaller, four is getting even smaller still. And each person you add, slow decision making, lack of control, buy in from everyone to make decisions, grows bigger and kind of the advantages get a little bit smaller. Alright, well I think that’s it, we’ve talked a lot about the advantages and disadvantages, so it’s solo with having partners. So what I want to leave this on is not a conclusive partnership, I think it really matters about who is your partner and how you work together, and what your relationship is like. The more I’ve done business, the more hesitant I’ve gotten of jumping into a business with someone, and the pool of people I’d be willing to go into business with has gotten smaller and smaller. You should be very, very, very, snobby about who you get into business with because the skill set of someone who makes a good entrepreneur is quite small. You need someone who is self-disciplined, creative, courageous, and you need someone who works well with you. To find that person is very difficult. So if you got someone like that, hold on to them. Lots of the business I have are crossovers with people that I’ve worked with before. If business is good, I’ll talk to them about the next business I want to start. I often see people posting on forums, “I’m looking for a partner in this business.” I think it could work out, but it is quite risky. I think one of the really stringent. It would be better to go alone than to start with the wrong partner. If it goes wrong, that could be the end of the business. If it goes really wrong, it could be even worse than that. I met someone at a conference last year who was telling me he started a business and his partner went into a bank account and stole the money and he ended up in a 10 year long legal battle to reclaim it, and all that time he was having to still work in the business, on his own, and pretend that him and his partner were all fine. Pretend to clients that there was no issue, that all this time he was spending thousands and thousands on legal fees, just trying to sort out a bad decision he made about who to go into business with. So on that depressing note… 

 

E: You can’t leave it there! 

 

S: On a good note, I will say that my net benefit has definitely been on the side of going into business with partners. I would not be where I am today if I had not gone into business with partners and had just tried to do it all my own. And let’s leave it there.