Marc Horne, Co-founder and CEO of HC Consulting Group.
Hollis Carter, my good friend of 10 years, the CMO and main face of HC Consulting Group, is stepping down from his position at HC. Our friendship remains strong which is probably more than most people in a similar situation can say when closing out a business partnership. The situation is tricky, of course, and I’m sure it will ring home with some folks out there, so I’ve decided to share the story.
It all started about 5 years ago when I decided with my brother, Tyler, and my college roommate, Hollis, to start a software company. We had collectively saved about $25k and decided to invest that into our new business to create our first platform; a gradebook management system coupled with a social network, which we call SchoolBridge.com. We hired a development team in January 2008 and set out building our first piece of software. During this time I lived and breathed this new venture; I literally was roommates with Hollis and discussed the business over phone calls to New York City with Tyler daily.
Hollis and I graduated college and moved into an apartment in the Virginia Highlands neighborhood of Atlanta. That summer, Tyler came down from NYC and over the next few months stayed on the couch as we prepped to launch our new business.
A byproduct from creating SchoolBridge was we had the initial designs of a pure social networking platform. Now, we decided early on that we wanted to offer SchoolBridge as a free service to any school nationwide in need of such a service. Over the course of a few month we culled all the social network aspects out of SchoolBridge onto a development server, added and built some additional features and ended up creating Social Network Empire (SNE), which we operate as SaaS and sell licenses for its use and which we still run and operate to this day.
Starting a business comes with risks and as such is a little scary. I didn’t have an income stream going in; the money I had saved up was just about all invested into our software development and it really was a ‘do or die’ type of situation.
Needless to say, after a lot of hard work and sleepless nights we hit the ground running and HC Consulting Group brought in our first dollar on October 21, 2008. That first month in business we brought in about 99,000 additional dollars and were immediately in the black. Whew!
Over the past 4 years since we first launched our business we have created a suite of software services to service small businesses, entrepreneurs, and online marketers.
Our business has taken us around the world to Spain, Mexico, India, France, Canada, amongst other places. Running with the bulls and doing business from an RV in Spain and France was one my highlights for sure. Our Workations to Mexico where we brought our entire company was not too shabby of times either!
It has been an incredible ride, but I would be lying if I told you that it has been a smooth sailing course. Obstacles and roadblocks come up all of the time when running a business and what separates those that find success from those that don’t is the motivation to not give up, accept failure sometimes, and finding a way around the obstacles that get in our way….
Obstacles we had in launching a business.
Sure, I graduated with a degree is business management from Kennesaw State University and was prepared as I could ever be. In theory I knew how to run a business, but the reality is that no amount of preparation or studying from a book can prepare you for running a business as well as just diving in headfirst and making moves.
Just so you know, if you decide to start a business with partners – be sure to have an operating agreement and go over the “what ifs” right from the start.
Plan for eventualities. We had never launched a business before and the process of learning the ropes while running the day to day operations and in between taking account of necessary systems and processes that were before unknown to us even with a business background, left us in a constant state of what some people might call paranoia, but at this point it’s what I call an attitude of preparedness. They say hindsight is 20/20; well that couldn’t be a truer statement.
Our network of business associates and friends we have built up over time, coupled with the vast knowledge of free information that the internet and books have in them enabled us to tackle each and every obstacle that we have faced.
This article is not a history lesson on our business, but rather an explanation, or an inside look on starting a business with partners and the chain of events that led our CMO to step down. Starting a business with a partner offers many huge benefits, but time after time we see that partnerships can quickly go bad if you don’t properly plan in advance.
Partnering With Friends
Launching our business with 3 partners was a very good idea for us and with the proper planning and consideration a partnership can be an unequivocal success. My strengths and weaknesses, and those of my 2 partners was in perfect alignment. Doing a SWOT analysis and making sure that your partners cover the areas where you lack is a vital component to having a successful partnership.
I knew for most of my life that I never wanted to have a real “boss” so to speak and have been entrepreneurial, business oriented, and creative since I was a young kid. Starting a business was the natural thing to for me to do and having a couple partners enabled me to share the cost of start-up, share responsibilities and workloads, share the inherent business risks and expenses, as well as put myself in a better position by utilizing complementary skills and additional contacts from each of my partners; not to mention the accountability. Having business partners and being held accountable is something that you really can’t pay for.
The mutual support and motivation in our launch/start-up phase (and even to this day) has been incredible and enabled us to achieve greater financial results together than probably would have been possible apart from them on my own.
“Businesses with multiple owners are more likely to survive longer than sole proprietorships,” says Economist Brian Headd of the U.S. Small Business Administration.
I stand behind and vouch for Brian’s statement 110%.
As with other business considerations though, partnerships can be a good or bad thing depending on the parties and circumstances involved.
Some possible cons of going into business with partners (which I have only recently learned about – like I said earlier – how the heck do you plan for things that you don’t even know about) include:
Partners are jointly and individually liable for the business activities of the other partners. If your partner skips town on you, you’ll be liable for everything, not just half. You have to share profits and you do not have total control over the business. Decisions are shared, and differences of opinion can lead to disagreements, a “falling out,” or even one partner buying out the other.
Before starting a business and entering into a partnership, it is a wise decision to first determine whether or not you yourself are cut out to be the “partner type of person;” and if so, to thoroughly investigate prospective business partners as well.
There’s also a chance that one business partner may not work as hard as the other, but will want the same rewards as the more ‘valuable’ partner. If you have a low tolerance level for this type of thing, a partnership may not be for you.
As with different roles of partnerships, different partners undoubtedly see what they do as the more valuable role.
As funny as it sounds, a business partnership is much like a marriage, and just as you would (or should at least) take great care, time and consideration in the selection of a husband / wife, the same applies in the selection of a business partner.
During your “dating” period, here are some questions to ask yourself to find out if you’re compatible:
Do we have the same ethics, motivation, values and similar work styles / habits? It goes without saying that getting into a business with an unmotivated and shady character will most likely end up going sour quickly.
Do we have the same long term goals; 5 years, 10 years, 20 years? Does one of your partners never want to get married? Is your goal to work less, travel more? These are the types of questions that are wise to go over prior to forming your partnership.
Do you have a similar vision, ideas and objectives about how to run the business and where you want it to head? If you do not have a similar vision – you shouldn’t really be discussing partnering with that person in the first place.
Do your strengths and weaknesses align well with each other? This is absolutely critical and truly one of the factors that has enabled HC Consulting Group to accomplish what we have. You should not have a business partner who has the same skill set as you. You want to look for varying skill sets such as technical ability, networking ability, speaking, selling, writing, and creative thinking to name a few.
Are you able to communicate well with one another in a pleasant, respectful and comfortable manner? Without a doubt, you will get into arguments and yelling battles ever so often and you all need to be sure to keep a level of professionalism.
In your gut, do you trust this individual? If you don’t trust the individual, you shouldn’t even be debating on going into business with them.
You will also need to do some research about your prospective partner. Check out the individual’s background thoroughly by, for example, talking to former employers or business partners.
As tempting as it is to go into business with a friend or relative, be aware that there’s a huge difference between getting along with someone on a social basis, and working together in a business. Many friendships have been lost forever to a business partnership gone bad.
I went into business with a relative (my brother), and a best friend!
How it came about.
It came about as our goals and visions began to slightly differ. Tyler and I were recently married, which brings with it a whole new set of priorities, goals, and designs on even running our business. Hollis is still a bachelor and as such is on a different page entirely. We started to get into various smaller quarrels every now and then and finally had the big important phone discussion.
“Guys, I believe that we are in different places, have different goals, and I feel as if I am bottlenecking our company. Our friendships are the most important thing to me so I would like to take steps to step down from our business.”
The conversation lasted around 45 minutes but that was the general gist of it, which by the way is probably the most effective way to tell your partners that you want to step down if you find yourself in a similar situation.
When A Partner Leaves:
Since a partnership is always much easier to get into than to get out of, it is very important to have complete clarity at the outset. Avoid any potential problems by making sure duties and responsibilities of each partner are detailed in a legal operating agreement from the get-go is important.
Again, we had never created a business before and literally just dove right in head first with verbal agreements. Not having an operating agreement will make the situation a bit tougher for you.
This agreement should include and set forth: division of labor including who’ll be responsible for making purchase decisions; how much capital each will contribute; who owns what; how decisions will be made, profits will be shared, disputes will be resolved; a buy-sell agreement; and who will be entitled to what if the partnership doesn’t work out, non competition clauses (just to name a few).
Involve a lawyer and an accountant from the outset to help form your partnership and to draw up legal agreements. And don’t forget, take your time. Just like a good marriage, you’ll want this business partnership to last.
Hollis is moving on to other ventures and the reality of it is that this move should help him do more of what he wants to do and enable us to take control of our company more and do far greater things. Sometimes, in fact more often than not, a change must occur in order for us to advance and I firmly believe that this move will help HC Consulting Group as well as Hollis be able to achieve far greater things.
It has been and continues to be our goal to create and manage software platforms and services that help business owners, entrepreneurs, and everyday folks utilize the internet for their advantage. This mission has steered us to create incredible services such as DailyDealBuilder.com which has been transforming the daily deal industry and paving the way for thousands of businesses and entrepreneurs to launch a daily deal business.
Our plans to grow our business and continue helping more folks out has not faltered one bit and I believe that now more than ever we will continue growing by leaps and bounds.
We will all miss you Hollis and look forward to see the great things that you accomplish as well as continuing to grow the friendship that we have started.
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