Questions Potential Business Partners Should Ask Themselves
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Questions Potential Business Partners Should Ask Themselves

Starting a new company with somebody requires a hard conversation. Better now than later.

By MOLLY BAKER
Fri, May 10, 2024 8:41amGrey Clock 5 min

You and a friend have a can’t-miss idea for a new business. You’ve got a great name, and the logo is perfect.

It is time to ask each other some hard questions.

Talking up front about tough subjects like how you work, how you deal with stress and your expectations for the business can save lots of headaches later. “Most issues are neutral when you discuss them ahead of time,” says Jane Brodsky , who ran a barre-and-spin studio with a partner for 10 years in Washington, D.C. “But in the heat of the moment, issues become personal and larger than they need to be.”

Here are crucial questions that should be settled at the start to help make the partnership succeed.

How did your family communicate?

Maybe you were raised in a family that talked through disagreements to find solutions. But maybe your partner grew up in a house where the loudest voice won. That could be a problem when issues arise in the business: Experts say that when people are under stress, they often fall back on behaviours that were imprinted at home—and different styles could clash.

At Happy Being, a company that sells nutritionally enhanced teas and drink powders, the three co-founders discussed communication style before they started the business. “We discovered that one partner gets triggered if he feels no one is listening,” says co-founder Dutch Buckley . “It goes back to an early fear of not being heard.” (For his part, co-founder Josemaria Silvestrini says that early on he “definitely needed the validation of being recognised and being right.”)

So, the three work at making sure everyone has a say in meetings, and they made a rule that no one’s work is ever belittled. On the flip side, when someone on the team accomplishes something, someone else on the team draws attention to it.

What does success look like to you? And failure?

While these may seem obvious—like, the business either succeeds or fails—everyone’s definition is different, and they are surprisingly specific. Certainly, monetary goals or anything that can be enumerated will help partners envision each other’s goals. Is one looking to grow slowly with customers and suppliers in the community and get to better than break even after three years, while the other wants to be cash-flow positive in year one and scale quickly to sell the business to a larger entity after 10 years? There’s a lot of success and failure in between those two outcomes, depending on your perspective.

Silvestrini of Happy Being recommends hashing it out together on the whiteboard until everyone agrees on an explicit definition of success for the company. “Hopefully, it’s an easy 10-minute conversation,” he says. “Because if founders have different objectives, the boat is going nowhere.”

What does everyone bring to the table?

It is crucial to discuss what each partner is contributing to the partnership in terms of expertise, experience, network and money. Kathryn Zambetti , an executive coach specialising in founder relationships, recommends taking an honest strengths-and-weaknesses inventory of yourself and your partner and then discussing what you both bring to the table. The exercise will help delineate which responsibilities naturally suit each partner, and it will highlight areas that will require additional work or outsourcing.

The clearer the roles can be defined, the better. If you are opening a bakery, you and your partner shouldn’t both be good at just making bread. Someone needs to handle marketing, suppliers, leases and licensing, financials and hiring and managing employees.

Why are you doing this?

You and your partner need to be in complete alignment on your motivations. Does this venture need to support your family or merely add to your vacation fund? Are you doing it to prove your father or your high-school econ teacher wrong? Any answer other than unfailing commitment to the mission or the product is a red flag.

“Your north star has to be something bigger than money to succeed,” says Buckley. “People will go through things that test them, but if money is the only motive, that won’t be enough.”

What pushes your buttons?

Just like in a marriage, you want to know best how to support and protect your business partner. Understanding what puts each of you in a fight-or-flight mode can be key to getting the best out of each other.

Do you need to be consulted on all decisions, or just major ones? Do you need to be recognized as the leader and sit at the head of the table? Do you fear having to downsize your home if the business fails?

What does your workday look like?

Does a day at the office mean working 9 to 5? Can the work be done remotely and on your own time? If you work well at night and need rapid responses to questions, is it a problem having a partner whose phone goes on “do not disturb” every evening at 7? Having the conversation and understanding expectations is key.

When Buckley started Happy Being, the team learned that one of the partners got up very early. “I had to tell him, ‘We don’t want 6 a.m. calls.’ ”

Do you like taking gambles?

A penchant for lottery tickets, Las Vegas gambling or high-adrenaline activities like skydiving shows a potential partner’s tolerance for risk and whether that aligns with your own. There will be countless decisions early on in a business concerning risk, and the partners need to be on the same page.

So ask about it. You go into the venture planning and hoping for success, but how much money or time is your partner willing to lose if it doesn’t succeed? How much of their parents’ or in-laws’ money would they bet on the partnership?

Is the business more important than the friendship?

Many business partners start as friends. But would you each be willing to give priority to making the right decision for the business, even if it means possibly hurting the friendship? Would you each be capable of letting the other one go if it was better for the company? Most advisers recommend choosing a partner who has a common business goal and letting the friendship build from that, rather than trying to build a partnership on top of a strong friendship.

“Your business partner will be one of your most intense relationships, but it shouldn’t fulfill every role in your life,” says Amy Jurkowitz, entrepreneur and co-founder of branding adviser Bread Ventures. “You need to be compatible in how much energy you will both put into the business.”

If the partnership doesn’t work out, how will it end?

A co-founder relationship is a binding agreement with financial and emotional repercussions, just like a marriage. But starting a business has the added stress of having the company—the baby—arrive on day one. If there is a divorce, who gets custody?

The more specific you can be about potential breakups, the better. If you are both putting capital in at the start, would you expect to get that out if you exited? What if, several years in, one partner can’t continue to struggle without a regular paycheck and leaves—and the next year the company finally turns a profit or is bought by another company? Would the partner who left get a share of the money?

These discussions should help make it clear that the survival of the company—and not the partnership or the friendship—is the ultimate goal. Those who have been through a business breakup recommend involving a third party to help sort through these issues at the outset.



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The generational investment divide for Australians

A new report on the impact of cost of living pressures reveals a stark contrast between age groups in investment strategies

By Bronwyn Allen
Fri, May 17, 2024 3 min

Four in five Australians say they have changed their investment and savings goals over the past 12 months, with 44 percent doing so primarily to make ends meet during the costofliving crisis. A further 25 percent say theyve switched strategies to protect their wealth against inflation, according to a new survey by financial advisory firm, Findex.

The Superannuation and Retirement Insights report shows Australians have also changed their goals to grow their wealth (31 percent), to create a regular income stream (29 percent) and to reduce taxes (17 percent). Transferring wealth to their children or other family members has motivated 10 percent of Australians to alter their investment plans, which is likely reflective of the increasing role played by the Bank of Mum and Dad in young people’s first home purchases.

The report found that traditional investment avenues, such as property and superannuation, remain the most popular choices, with more than eight out of 10 survey respondents ranking these asset classes highly. But there is also an increasing inclination towards investments that offer the potential for quicker returns, additional perceived safety, and better liquidity or accessibility to funds.

Eighty percent of survey respondents also nominated bank savings as among their top five investment choices right now, followed by shares (66 percent) and cash (51 percent).

This shift reflects a broader strategy to mitigate current financial uncertainties, balancing the pursuit of long-term wealth accumulation with the need for immediate financial security,” the report says.

While superannuation is considered a cornerstone investment for retirement and long-term wealth accumulation, 85 percent of Australians are exploring investments outside superannuation. The most common investments outside super are bank savings (64 percent), property (38 percent), cash (35 percent) and shares (34 percent).

However, when the data is broken down by generation, stark differences are revealed in how each age cohort chooses to invest their spare income and why.

Most popular investments outsider super and the motivations to invest by generation

Baby Boomers (born 1965-1964)

Outside superannuation, Baby Boomers prefer to invest in bank savings (60 percent), property (50 percent) and shares (46 percent).

By far, their primary motivation for investing is planning for retirement (80 percent). They also want to build wealth (51 percent) and support their children or other family members (25 percent). Other motivations include preserving wealth to beat inflation (22 percent) and paying off a mortgage or other debt (20 percent). They are the least likely generation to be saving for an investment property.

Gen Xers (born 19651980)

Gex Xers prefer to invest in bank savings (57 percent), property (43 percent) and shares (36 percent).

They are motivated to invest for retirement (66 percent), to build wealth (50 percent), to save for emergencies (36 percent), and to pay off a mortgage or other debt (30 percent). Interestingly, Gen X is the generation most concerned with supporting their children or family members (33 percent). This may be because Gen Xers have grown up during Australia’s long-standing property boom that began in the late 1990s and continues today.

Millennials (born 1981-1996)

Millennials have the strongest interest in bank savings as an investment avenue (70 percent), followed by property at 41 percent. They also like cash (35 percent) and shares (33 percent). Millennials have the highest uptake of exchange-traded funds (ETFs) at 21 percent. ETFs are a relatively new type of asset class, with the first ones trading on the ASX in 2001. ETFs are a basket of shares that can be purchased in a single transaction for instant diversification. Millennials are also the generation most interested in cryptocurrencies, with 22 percent invested.

Their biggest motivations for investing are to build wealth (55 percent), save for emergencies (50 percent) and plan for retirement (49 percent). They also want to support their kids (32 percent) and pay off their mortgage (32 percent). Millennials are the generation most likely to be saving for an investment property (28 percent) rather than a first home (17 percent).

Gen Zs (born 1997-2009)

Gen Zs spread their money across more asset classes than their elders. They like investing in bank savings (66 percent), cash (42 percent), shares (22 percent), ETFs (17 percent), property (14 percent) and cryptocurrencies (13 percent).

While Gen Zs are the youngest age cohort within the survey, they also have long-term goals just like their elders. The biggest motivation to invest among Gen Zs is to build wealth (52 percent). More Gen Zs are saving for a first home than any other generation, with 42 percent pursuing this goal. They are also the generation most concerned with preserving wealth to beat inflation (29 percent). Gen Zs also want short-term security, with 46 percent saving for emergencies. They’re also the generation most likely to be saving for other major purchases like a car or holiday (41 percent) and investing just for enjoyment (26 percent).

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