How to survive a partnership
When two former veterinary school classmates teamed up to open a practice in Connecticut several years ago, neither one expected the union to end in all-out client confrontation. But it did—in the parking lot shared by the doctors after they eventually separated. When the partners finally decided to go their separate ways (I don't know all the details, but I suspect a woman was involved), they didn't go far. Instead they opted to set up rival practices next door to each other, allowing them to keep an eye on which practice their once-mutual clients preferred. I heard that one doctor even accosted a client as she entered the opposing practice.
As a consultant, one of the worst things I deal with is dysfunctional partnerships—those situations where one partner sees white, the other sees black, and no one is willing to look for the gray. What comes between partners doesn't really matter. What's important is how they handle their differences. Poorly managed partnerships bring the whole practice down, from the doctors involved to the staff and clients. But well-managed relationships benefit everyone—especially you. To avoid the pitfalls of partnership, follow my advice below.
TEST YOUR COMPATIBILITYYou must look at a partnership as a professional marriage. In fact, you'll probably end up spending more time with your business partner than your spouse. I strongly suggest that you work with someone at least three—ideally five—years before you offer the option of partnership. You need to like this person. You don't always have to agree, but you must respect each other well enough to agree to disagree. In the last year or two of this "anniversary" period, treat your potential partner as though he or she were already an owner. Bring this person into the decision-making process. Delegate responsibilities and observe how your potential partner works under pressure and deals with difficult issues that affect the practice.
I recently met two individuals who were considering partnership. One of them, the current practice owner, had been at the practice for over 20 years, while the other had worked there only the past three years. The associate wanted the practice to switch from its current yearly vaccination program to adopt the newer vaccination guidelines, but the practice owner was apprehensive, fearing loss of income.
It was interesting to watch the two work through the situation. The associate was careful in her approach and took her time discussing the proposed change with the owner. She didn't take an attitude of "I know better than you" but instead was courteous and respectful. Slowly the practice owner came to agree with her point of view and eventually made the change. The new policy went into effect without a hitch. And more importantly, the two of them worked through a touchy subject and did it well. This partnership has great potential.
Many sole owners ask me why they should even consider partnership. Things are going well, they say; they get to maintain complete control over their practice, don't have to ask anyone for permission, and make a pretty good living. Sounds great, doesn't it? But what happens if you die, become disabled, or for some other reason can no longer practice? What will happen to your practice then? I'll tell you what might happen. The practice could sit dormant for months while your spouse mourns your death, its value deteriorating all the while. When your spouse does finally decide to sell the practice, only the equipment and real estate will have retained value. Not a pretty picture for your family.
On the brighter side, what if you want to sell your practice or initiate an exit strategy? You need someone to sell to. If you have a partner, you can gradually sell your practice shares to him or her, have an exit strategy in place, and maybe even sleep better at night.