The difficult words came at a recent lunch with an old business friend: "Mike, I'm never doing another partnership. With my next company, I'm going to maintain full control."

A couple of years earlier, my friend had sold his share of his company to his ex-partner through a process known as a 'shotgun.'

I always thought shotguns were used by parents in certain American states to make sure their kids got married quickly. But in the business world it's a high-stakes, last-resort method of breaking up a partnership. Many years ago, my first company was a partnership too, and it wasn't a pretty ending. But I've been able to rebuild a healthy relationship with one of my ex-partners in recent years. And I've spent some extra-long sessions at coffee shops with other friends whose partnerships didn't work out.

So, are partnerships even worth considering when you start a business? I've changed my mind on this subject over the past few years.

Partnership: Legality versus reality

The first thing to consider is that Canada has a legal definition for a partnership. It's not much different than a sole proprietorship, except that two or more people share the proceeds.

There are plenty of details related to a legal partnership, but in reality they're rarely the structure of choice for us – even if you and a partner want to share the ownership equally, sooner or later you'll have to consider giving some ownership to key employees. Many employees like to own a piece of the company they work for and they'll let you know this sooner or later. So the reality is that if you're a techie starting a company, it will more than likely be a corporation. But if two or three people control most of it, then it is effectively a partnership.

Mega partnerships

The next thing to consider is that there have been some outrageously successful partnerships in the technology world. In 2007, RIM, run by two people, became Canada's most valuable company. Another startup you may recognize, Google, is run jointly by two people, with a not-too-shabby CEO thrown in by the investors to make a threesome. So it looks like partnerships may be worth the bother in some cases. It's wise to note that both these examples are corporations, but the founders continue jointly running the company while all other shareholders are simply along for the ride.

Partnerships, it turns out, have some pretty compelling advantages. The first is twice the amount of 'founder-energy.' It's kind of like the antenna diversity employed by many WiFi access points – when one antenna is in a terribly deep fade (low on energy), the other antenna is enjoying great signal strength (lots of energy). Starting and running a business is very challenging; that's one of the reasons many don't make it. Partners can help each other when one of the two gets stuck.

Here's something to think about: many of the partnerships ending in 'divorce' may not have even gotten off the ground, had the partners started the business on their own. They simply wouldn't have had the energy to pull it off.

Aside from energy, partners also have different skills and the sum of these skill sets may be crucial to the founding and ongoing success of the business.

Founders can even develop an almost creepy telepathic ability. In David A. Vise's The Google Story, you can read about Google's GPS meetings, where Google employees get to present their product ideas to the founders. "Larry and Sergey sat side-by-side in these tightly-run sessions. After years of working together, the two could quickly communicate on multiple levels through gestures and expressions."

Partnership models

I've observed some distinct partnership models, with each model having successful and unfortunate examples. The RIM and Google cases are examples of partners as co-managers of the enterprise, with equal ownership stakes. This is the identical situation as in the case of my friend's company – both partners ran the company together.

Another interesting model is where one partner actively manages the company and the other only provides financing (sometimes called a silent partner).

In my company, for example, my partner owns a smaller share than I do, doesn't actively participate in running the company, yet regularly makes suggestions about how to improve the company. It would be pretty crazy not to listen to such suggestions because silent partners often have a wealth of business experience, and they are often friends (as in my case).

Partnerships can also be 'distributed partnerships,' where two or more people form a company but each one lives in a different city, covering a seperate territory. They benefit from the collective strength of being part of the same company.

And a very novel model I've been studying is the 'time-share partnership' where two partners take turns running the company. It's kind of like a relay race, where each runner gets a break while the other runs flat out.

I've even heard of cases where one partner runs a completely different business within the same organization. In one case the main company repaired business equipment, and a junior partner ran a company within that collected, refurbished, and resold the equipment, often to the same client base.

The secret

Getting back to my friend's comment about never doing another partnership, I think the secret, as in any relationship, is partnering with the right person. If you've been burned once, you might feel like partnerships can never work – but don't close the door for good. You might even bump into someone with telepathic abilities that's looking for a partner.

Your new partner's telepathy could become your secret weapon. n

Michael Wakim is the founder and CEO of Fidus Systems, an Ottawa-based electronic product development company. Fidus develops electronic products for a wide range of industries including aerospace, defence, consumer, medical, industrial, semiconductors and telecommunications. If Michael's articles interest you, consider learning more at www.fidus.com or e-mail careers@fidus.com.