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Partnerships

Third Time Lucky

Samantha Harper lost a business because she failed to sign a partnership agreement. That’s the downside to trusting too much. The upside is that it’s the kind of mistake you only make once.

Juliet Pitman

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Vital stats

  • Player: Samantha Harper
  • Company: Nu Beginnings
  • Est: 2010
  • X-Factor: Delivering a professional, ethical service in a sector that’s developed a poor reputation.

“Signing a partnership agreement is a lot of paperwork. Let’s start working together, see how we go and we can look at it in a year.” These famous last words are burnt into Samantha Harper’s brain. They cost her a business but they taught her a vital lesson – don’t take things at face value, and always get a legal contract in place before you enter into any kind of partnership or agreement.

Harper was running a small recruitment consultancy in Cape Town when she entered into an agreement with a Johannesburg-based agency to launch their brand in a Cape Town branch. She moved across her clients, database of candidates and every piece of intellectual property into the new company under the new brand name.

The partnership agreement never materialised and the partnership turned sour. Harper says she’d expected to at least get a majority shareholding in the Cape Town branch, given that it was started with all her clients. It wasn’t to happen and she was eventually ousted from the company.

 “I took the case to the CCMA and won, but I’d lost my business and had to start over again,” she says. The lesson was simple but powerful – only trust when you have a watertight legal agreement in place.

“I was behind on my rent, had to sell my car and my dad took out a second bond so I could start Nu Beginnings,” she says. It was to be the third recruitment company she started and Harper was passionate about getting it right this time.

She’s successfully differentiated the business as ethical, above-board, professional and thorough in what is often seen as a notoriously dodgy industry.

She’s found a niche focus – on the competitive, skills-short IT industry. But by her own admission it‘s taken her a while to find her feet. She describes herself as being ‘all over the place initially’. “One month we were specialists, the next we were servicing everyone. First we were doing Cape Town and Joburg, then we were only doing Cape Town,” she says. That all changed thanks to an unlikely catalyst.

“My receptionist told me one day to get a grip and focus, that I was confusing everyone. That really hit home!” she says. She focused on finding direction but she believes she would have got there sooner – and avoided many mistakes – if she’d done her research and been better prepared. “If I’d thought things through first before jumping in with my boots on I would have defined the direction, the market and the business offering earlier on,” she says.

The learning process is an ongoing one. “I struggle to balance being an entrepreneur, a wife and a mother. I look for young female entrepreneurs who are in the same situation so I can build a network with them. Sharing lessons with people in the same boat can be very powerful,” she says.

Looking to Commit to a Business Partnership? Here are 10 Questions You Need to Ask.

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Partnerships

What To Do When Partnerships Go Bad… Very Bad

What do you when the honeymoon is over and you discover that you’ve gone into business with a snake?

Alan Knott-Craig

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Q: My business partner is trying to screw me out of my business. I approached him a month ago to say I wanted to chase a different path, and sell my minority stake. It’s worth R1 million, but the shareholder agreement says that if I resign he has a call option to buy the shares for nil. His response to my request to exit was that he would exercise his option and pay me nil. What should I do? Should I stay? Should I walk away from the shares with no money? Should I fight for what he owes me? I’m not happy in the company, but I can’t bring myself to write-off the value of my shareholding. — Anonymous

Know who you’re partnering with

I have bad news for you. You’ve lost your money. Kaput. Gone. Minority shareholdings in unlisted companies are worthless, unless you’re in bed with honourable people.

If your majority shareholder is a crook, you’re screwed. You can’t sell to someone else, and a crook won’t do a fair deal to buy you out. If you stay, you’re delaying the inevitable.

You will be screwed. Rather leave now than later. Rather be happy than hang onto the promise of a pot of gold that never materialises.

Focus on creating new wealth

You’re an entrepreneur, so you have the instinct to fight. To never give up. To persevere. This is one of those times where your instinct is wrong. If you fight, you’ll end up in the mud with a pig. Pigs love the mud. He’ll enjoy it, you won’t. Worst of all, you’ll invest energy in trying to regain what you had rather than creating new wealth.

It’s a bit like trying to win back the girlfriend who cheated on you, rather than going out and finding a new girl. Rather find a new girl.

Don’t seek revenge or short term satisfaction

Once you’ve accepted that staying is not an option, and nor is fighting, the next reaction is revenge. “Damn it, I’m going to punch him in the head!” Short-term satisfaction. Long-term, it makes you look bad. And maybe you go to jail.

The best outcome you can hope for is that your story gets traction in your industry/circle of friends/town before his story. Believe me, he has already told everyone he knows that you’re unethical and screwed him. That’s what crooks do.

Related: 7 Ways To Quickly Spot The Wrong Partner (And 3 Tips To Get It Right)

Good luck fighting the war of whispers. Rather don’t. It’s bad energy. Who cares what people think. The people who care don’t matter, the people who matter don’t care.

Let your reputation define your achievements

In the end your reputation will be defined by your life’s achievements, not by the words of a crook. If you are a nothing, no one will care about his words. If you make it big, no one will care about his words.

If you want revenge, be successful. Success is the ultimate revenge. The rule for partners is this: Make it easy for them to screw you early. That way you don’t waste a whole lot of time with the wrong partners.

Whatever happens, remember this: Life is an adventure. It’s your choice how you describe your story. Is it a sad drama (‘Oh woe is me’), or is it a funny story with some speed-bumps and a happy ending? Frame your story as the latter. You hit a speed-bump, not fun. But not the end. The truth is that business is rough and tumble. So toughen up.

Don’t lose faith in your abilities

This is where it’s useful to have a loving spouse. With him or her at your back you can withstand anything. Whatever happens, don’t lose your self-belief. You have the magic.

You’ve had a bad experience in business. So what? You trusted someone. That’s not such a bad thing. You just got a bit unlucky that he was a crook. Next time lucky. But there is no next time if you lose your self-belief.

Winston Churchill lost all his savings to financial con-men in 1929. He said he was faced with two choices: Fight to get back what he lost, or make more money. He decided to make more money. Keep moving forward. Don’t look backwards.

PS: The best way to deal with a crook is to play dead. Cut him loose. Don’t engage at all. Just play dead.

Related: 5 Things to Do Before Saying ‘I Do’ to a Business Partner

Listen to this

Alan’s audible book Be a Hero: Make Life an Adventure is now available on amazon.com and Audible.com

Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure but also changing your mind-set and tackling adversity.

Ask Alan
Do you have a burning start-up question? Email: alan@herotel.com


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Make Absa Your First Business Partner

Thinking of starting your own business? We’ll help you think further with a start-up plan, funding, payroll guidance and Enterprise and Supplier Development solutions for your business.

Absa

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Thinking of starting your own business? We’ll help you think further with a start-up plan, funding, payroll guidance and Enterprise and Supplier Development solutions for your business.

Firstly, consider opening an Absa Business Banking Account by choosing from our range of tailored transactional account options online. You’ll be able to make and receive payments through multiple channels that make your banking as hassle-free as possible with our cash handling solutions and merchant services.

Plus, if you are a new business owner you can open any of the business accounts we offer online, register your new company with the Companies and Intellectual Property Commission (CIPC) and get a South African Revenue Service (SARS) tax number in one go.

Related: Business Partners Limited Explain What It Takes To Have The X (Fundable) Factor

A business plan is also essential for every entrepreneur, as it forms the roadmap of how your business will achieve its goals and should include its operational, financial and marketing strategies. Our team of experts will always be available to give you all the assistance you need with your business plan.

Once you’ve drafted a comprehensive business plan and you are ready to venture into the world of business, your next step is to register your business as mentioned. SwiftReg assists with checking existing company names and registering your company’s name, B-BBEE certificates, clearance certificates and more.

We also offer advice to franchisees, whether you’re thinking about buying a franchise or want to turn your existing business into a franchise network. And, if it’s funding you need, we’ll work with you to find the right solution. Our business funding solutions cater for start-ups and existing small, medium and micro enterprises (SMEs) with working capital or expansion finance needs.

Related: 10 Questions to Ask Before Committing to a Business Partner

Lastly, when you need help moving your fully-formed business plan in the right direction, you can visit any of our Enterprise Development Centres across South Africa to build and grow it from inception until maturity through unlocking access to financing, markets and business development support services.

For more information or to open an Absa Business Banking Account online, visit our website.

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Partnerships

7 Ways To Quickly Spot The Wrong Partner (And 3 Tips To Get It Right)

Finding the right partners is the path to happiness, good memories and success. On the other hand, finding the wrong partners is the path to conflict, angst and failure.

Alan Knott-Craig

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Business without partners is hard. And it’s no fun. No one to share memories with. No one to celebrate with. No one to commiserate with.

No one to hand over the reins to when you have a personal crisis. So how do you find the right partner?

Related: Getting Partnerships Right: Lucid Holdings

First, make sure you avoid the wrong partner:

1. Birds of a feather flock together

The best crooks are natural salesmen. They talk a good game. Penetrating the façade is impossible, so rather look at who she hangs out with. Are they your kind of people? If not, take a pass. Birds of a feather flock together, always.

2. Live a simple life

A flashy lifestyle attracts bugs. Money attracts leeches. Living the high life attracts the wrong kinds of people. Don’t stick out for having a fancy car. Keep your life simple and you’ll find that bad people will ignore you.

3. Ask your spouse

No one knows you like your spouse. Sometimes she can’t verbalise why someone is a bad match for you, but her gut is saying, “Stay clear.” Listen to her gut.

4. Make yourself vulnerable

If you want to know whether she is going to screw you, make yourself vulnerable. Build in an ‘engagement’ period during which you can break-off the relationship easily, and then make it easy for her to screw you.

5. Watch how she treats other people

Watch how she interacts with people when she doesn’t think you’re watching. If she treats the cleaner differently to how she treats you, stay clear.

6. Play golf

Competitive sport brings out the best and worst in people.

  • Does he lose his temper if the ball bounces badly? He can’t handle adversity.
  • Does he move his ball in the rough? He’s a cheat.
  • Does he throw in the towel before the hole is finished? He lacks perseverance.
  • Does he not care about losing? He doesn’t care about winning.

7. Turn up the temperature

Don’t be afraid to crank up the pressure. The only fool-proof method of finding out who people really are is to turn up the heat to the point where they crack.

Related: Getting the Most from Marketing Partnerships

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The right stuff

Okay, so you can filter out the wrong people. Now to find the right people.

Tinder may work for casual sex, but doesn’t work for long-term business partners. In general, the best way to find the right people is to make it easy for them to find you.

How do they find you?

1. Know thyself

If you don’t know who you are, you can’t be who you are. If you can’t be who you are, you can’t be authentic. If you’re not authentic, the right people won’t be attracted to you.

Find mentors, meditate, travel, read books, take risks, reflect on your experiences, do everything you can to maximise your self-awareness.

And then be yourself.

2. Tell everyone

She won’t knock on your door unless she knows you’re looking. Tell your family and friends that you’re looking for a partner. They will naturally filter people based on your personality.

3. Hold up a flag

She can’t knock on your door if she can’t find your door. Make it easy for people to learn about you and your mission, and to contact you. The Internet is the simplest tool for raising a flag. Start a blog, start opening up, start putting yourself out there.

You might think you have nothing of interest to say, but maybe someone else has been waiting their whole life to read what you have to say. You’ll never know unless you try.

Related: The Power of Partnerships

Formalising the partnership

Let’s assume you’ve found the business partner of your dreams. Now you need to put your partnership in writing, usually in the form of a shareholder agreement.

A shareholder agreement is not for marriage, it’s for divorce. You’ll never look at that document again until the day you have to break-up, especially if it’s an acrimonious break-up.

Pay attention to the provisions for exit and dispute resolution, the rest is gumph. Partnership is like the mafia. Hard getting into, much harder getting out.


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