Most business advisers will warn you that partnerships are doomed to fail. But the idea of sharing the rewards and the burdens of running a business with someone you admire and trust is just too appealing, and many entrepreneurs ignore the stern warnings.
The IRS knows of more than 1.6 million partnerships in the United States, and the total has been growing nearly 6 percent a year since 1990.
The bond business partners forge may include a personal friendship, but that alone is not enough.
What follows are three unique stories about partners, who have survived various stages of growth. We were curious about what enabled these alliances to stand the test of time, remain healthy and continue to grow.
Don’t throw your equity around
William Barron bought Ideal Packaging & Supply Canton Tape Co. in 1977 from a little old lady. Her husband, who had run the business for years as a part-time enterprise, had died.
Barron didn’t buy the company to continue running it from somebody’s basement. But it took some time for him to realize his operational strengths would not be enough to build the business. He needed sales, and he wasn’t the man for the job.
Barron called an John Carosielli, an old friend and a born salesman. Carosielli became a partner and vice president of sales in 1980.
Together, they took the packaging distributorship from a fledgling, part-time venture to a multimillion-dollar business now housed in a 12,000-square-foot building in North Canton. The partners, who had no employees when they joined forces, now have 14 full-time workers and a well-known presence among area manufacturers.
In a standard partnership agreement drawn up at the inception of their alliance, Barron retained majority ownership of the company.
He’s reluctant to discuss the issue of equity, and his sensitivity to the subject may be one of the reasons the partnership has held up.
“I don’t think I’ve ever exercised my majority say,” Barron says. “I’ve never had to. John and I always work through things together.”
Carosielli says he doesn’t see his minority stake as being a disadvantage.
“It’s never been an issue and Bill’s never thrown it in my face,” Carosielli says. “There’s no question we have to treat each other as equals. If we didn’t, it wouldn’t have lasted long at all.”
The two talk through major decisions but leave day-to-day decisions to their individual areas of expertise. Barron oversees operations and finance while Carosielli keeps a watchful eye on sales and marketing.
“It’s not all milk and honey,” Carosielli concedes. “Sometimes we argue. We don’t scream and holler as much anymore, but we settle things.”
When a deadlock does arise, Barron says they simply sleep on it.
“Usually by the next day, we’ve thought about it enough and we resolve it,” Barron says.
“If it’s really important to him or to me, we sit down and talk it over,” Carosielli adds. “There’s no easy way to decide sometimes, but we’re both smart enough to go with the better idea.”
Sometimes, the process is slow. Though that can be frustrating, both agree their relationship depends on the unspoken agreement that they’ll take as much time as necessary to come to an agreement on important issues.
“We had a new salesperson and wanted to track her progress,” Barron says. “When she said she was doing really well, John and I looked at each other and wondered, ‘If she’s doing well, why doesn’t the computer system say she is?'”
While Carosielli wanted to handle the situation, Barron convinced him, after much discussion, to go through three months of sales reports together.
“I was mad,” Carosielli says. “Why wouldn’t the computer do this for us? We spent hours pouring over reports together. Bill had other things to do and so did I. But there was no other way to verify what the computer was telling us. By both of us sitting down, we did it in less time.”
Barron leans back in his chair, deeply contemplating every word, and Carosielli smiles the way only a true marketing guru can.
“I don’t believe Bill has ever lied to me, and I’ve never lied to him,” Carosielli says. “Honesty is a basic need for a partnership to work. Once you start lying to one another, trust is gone, and eventually the partnership will be also.”
Barron says experience counts, but knowing a partner well is just as important.
“We have a common goals, we just have different ways of getting there,” Barron says. “We sit down and hash through it, and we will end up working it through because we both know what we want to do.”
It may sound a little corny but Barron and Carosielli genuinely admire one another. The mutual respect is part of what makes their alliance work.
Barron says of his partner, “He’s a damn good salesman.”
Carosielli counters, “Well, he’s so good with figures, he could take on most bankers.”
But the mutual admiration is reserved for the office. The two no longer socialize with each other.
“We did in the beginning,” Carosielli says. “But we see each other enough at work now.”
A higher purpose
Robert Beougher started installing and repairing overhead doors in 1963. Heidi Beck has been working in the business since 1952. Both could have retired back in 1993, when their employer at Reliable Door got tired of losing money and set out to close the business.
Instead, they bought it and changed the name to H&R Door Co. Inc. It stands for Honest & Reliable, and it’s the duo’s goal of living up to the name that keeps the partnership strong.
Not only did they buy a dying business five years ago, but they also didn’t have the money for an advertising campaign to turn it around quickly. Further, competition in their industry is fierce; the company has been unable to raise prices in three years.
“The cost of our equipment and supplies has gone up some but with all the competition, we just can’t raise our prices,” Beougher says.
As a result, if they’re going to succeed, it’s going to be by word-of-mouth, and that means doing more than giving customers what they pay for; it means leaving them delighted.
Eighty percent of the company’s business is residential, and Beougher estimates that eight out of 10 clients come through referrals-thanks to the solid reputation the two partners have built.
“Our business philosophy is when a job is finished, I want the customer to be satisfied, but I also want to be satisfied with the work,” Beougher says. “I’ve seen so many people being taken advantage of. I guess that’s why we wanted the name of the company to reflect our philosophy.
“We’ve been able to establish a good reputation,” he continues. “People from other Canton [door] companies can’t believe the relationship we have with our customers.”
The bond of trust between Beougher and Beck is apparent as they discuss their business. Beck’s eyes light up when she recalls the decision to buy the failing company.
“It wasn’t a case of choosing each other as partners,” Beck says. “We were here already. But we are lucky.”
Working together is one thing but now the 50/50 partners work together as owners. They work constantly at agreeing not to disagree. Each leaves the other to make final decisions in his or her area of expertise, but both say open discussion is vital.
If anything will strain a partnership, it’s hard times. And the company has been through some of that recently, after inventory and tools started to disappear.
“We had some labor problems,” Beougher says flatly. “Everything from impact wrenches and hand tools to electronic radio controls were missing. We sat down and talked and decided we needed help from the outside to make a decision.
“We got to the point where we had to do something-either file charges or get rid of some of the employees.”
But they couldn’t agree on how to handle the problem, so they brought in an attorney for advice and perspective.
“We’re both very motivated and expressive, but not pushy,” Beougher says. “We have no trouble making decisions. We sit down and ta
lk about things and realize with some problems, we need outside help.”
As a result of their process, Beougher and Beck fired five employees and kept only one.
It was a decision that has tested their belief in the company’s mission and each other because now they have to rebuild.
Beougher’s 83-year-old father helps out where he can, and Beougher works extra hours to help make up for the loss of manpower until new employees are hired.
“Our goal is to get the corporation back to at least three or four employees,” Beougher says. “We don’t want to become a big corporation. We’d like to keep it small but profitable.”
The first milestone
Tim Bush and Mike Schiltz worked together long before they became financial partners. And from the beginning, they knew they’d do well in business.
“The toughest decision we have to make together is where to go to lunch,” says Bush, a partner with Schiltz in Milepost Productions. “So we have a dartboard with a complete system for choosing places to go. We recognize each other’s strengths and rely on them.”
Schiltz and Bush consider themselves to be close friends as well as partners.
Because they have rarely disagreed, they didn’t see a formal partnership agreement as a priority.
In fact, Schiltz says they were “scared into” having a partnership agreement by friends and associates.
“When we first got into ownership issues, we were both very much idealists,” Schiltz says. “But when we thought about it, it made complete sense to have an agreement.”
Milepost Productions produces corporate training videos, advertisements and public relations videos as well as documentaries, such as the history of Stark County. The company is also getting into production for Web sites and computer CDs.
Sales have doubled in the past two years, since they bought the business, and the partners have brought on their first full-time employee.
The two met while Bush was working as a producer and editor for a Massillon-area video production house known as Bill Dewald & Associates Productions. Dewald was a “hands-off” owner, allowing Bush to run day-to-day operations of his company.
Schiltz was a freelance videographer and producer. When he needed a place to edit videos for clients, he rented equipment from Dewald.
Schiltz and Bush quickly became friends and enjoyed relying on one another’s skills. Eventually, they offered to buy out Dewald altogether.
“We thought, ‘Why work for a guy who isn’t here and isn’t coming back?'” says Bush. “The great thing about it is, Bill [Dewald] got to do what he wanted to do, and so did we.”
While they’re close friends, the two owners have different interests.
“I don’t like marketing and sales, and I didn’t do well at it,” Bush admits. “The way the company ran before was, we waited for the phone to ring. When Mike and I bought the company, we wanted to bring in new business. When you’re relying on the phone to ring, you also have to take whatever business you can get.”
Schiltz’s background is in marketing, and he says the new company needed to present itself not only to potential clients but also to the greater community.
“When we first started, we actually had other business owners tell us they thought our company was making pornography videos,” Schiltz says. “But now we walk into well-established firms, like Republic Engineered Steels and get a contract.”
“We both had goals of owning our own businesses before we even met,” Schiltz says. “It’s like any partnership … it’s like a marriage. You’ve got to work at it.”