8 Tips for Successful Business Partnerships
2016 marks my 16th year in the adult entertainment industry and the 10-year anniversary of my adult paysite management CMS software company, Elevated X, a still-thriving business formed out of a partnership that began 12 years ago.
Like many business owners, I have a business partner. My partner is someone I knew professionally (albeit loosely) prior to becoming formal partners. We’ve had a love-hate relationship at times. At one point less than a year after Elevated X’s inception we had a terrible falling out that resulted in us not speaking for a year, me being close to filing bankruptcy and Elevated X seeming as though it would never happen.
After a year of stewing in hate and resentment for this person, I swallowed my pride. I knew we had something special and the only way it would materialize was if we worked together. I picked up the phone and called him and the rest is history. We took the CMS off the market and spent a full year working on the software together prior to trying to sell it again. More than a decade later, this person is still my partner and my most trusted friend.
What works for us is that we get it. We don’t let our egos get involved, not even a little. We never lose sight of what we’re trying to achieve. We understand our roles and how they must change to accommodate each other’s needs at any given time and how we need to be. It’s very much like a marriage. There have been times when one person carries the other and times when one person wields the whip and motivates the other.
When my partner’s stepfather was battling terminal cancer and he barely worked for a period of months, I carried as much of the weight as I could. When I was going through a terrible divorce and barely worked for a period of months, he carried as much as he could. We debate well. We may rant and rave once in a while and every so often one of us may hang up on the other person in frustration but we rarely argue. We always try to work together on things.
Sadly, most of the other partnerships I’ve had and most of those I’ve seen don’t make it past the point we were at when we had our falling out.
Over the years I’ve gotten a fair share of phone calls and emails from upset webmasters, producers and performers. The story is the same — they have (or had) a partner and something went horribly wrong and they’re stuck. In more cases than I’d like to admit, the end result is the loss of a business. Seldom do people patch things up. For most paysite operators, I believe long-term partnerships are not the best way to go.
Starting a site can be challenging and without cash on hand or the willingness to go into some debt to fund a venture, there’s often no other way to get a site off the ground without taking on a partner in the form of another company or a multipurpose webmaster or web savvy person who will do the work. It’s quite a conundrum.
Here Are a Few Ways You Can Increase Your Chances of Having a Partnership That Works:
1) Understand why you are both partnering. If you’re a performer, is the person you’re partnering with doing so because they’re your friend? Is it because they want to shoot content and/or have sex with you? Is it because they are an experienced professional and they believe working with you is a good investment? Are you partnering with them because you’re lazy or lack the desire to do the work yourself or are you truly incapable of doing what’s needed?
When both people don’t truly “need” each other and/or what each person brings to the table is not equal, it’s often just a matter of time before greed, anger and resentment creep in and once it does, the writing is on the wall.
The best partnerships I have seen (including my own) are those where two people need each other’s resources and skillsets to create and manage a site and bring an equal offering to the table both short and long term.
2) Define what’s expected of each person, how often and for how long. Also define what happens if and when one person doesn’t hold up their end of the bargain. Will one person make a major investment of effort, money, time or some other resource up front while the other does not? What about daily/weekly/monthly/yearly on an ongoing basis? Who will be responsible for what tasks and when? If the deal isn’t 50/50, who will pay for things in the beginning and as time goes on?
For example, if one partner’s job is to supply new videos, write blog entries and do a weekly cam show, this should be stated along with what happens if the person fails to do this. Do they earn less percent share? Can they forfeit their ownership entirely for failing to do their part?
I’ve seen models try to take a site back because their web person failed at marketing. I’ve also seen a web person or designer try to take someone’s content because the model or producer stopped supplying updates and they felt the time they put into building and marketing the site was wasted. The only way to avoid such situations is to define these things up front.
3) Define who owns what. Who owns the domain names? Who owns the content? If the content is produced by both partners, who owns it? What happens if the project fails or the partnership dissolves?
Producers and performers should try to retain 100 percent ownership of their domain name and their original content and that all partners keep a backup copy of their web site for their own protection.
4) Have a complete understanding of operating costs and expected payments. If one partner is hosting the web site, make sure the cost of that is disclosed up front and whether that cost is to be repaid each month by both partners or that’s part of one partner’s contribution. Same with any other fees including accounting and billing processing fees that may come off the top before partners are paid. I’ve heard more than one person tell me their site makes $10,000 a month and they’re getting a check from their “partner” for $500 along with an explanation of all the miscellaneous “fees”. Be sure you know where the money is going. All partners should have access to all accounts, including bank accounts.
5) Ask questions and determine how each partner operates. How much free time does each partner have for this project on a startup and ongoing basis? Does the producer or performer or content supplier work nights? Does the web person have another day job and take 12-24 hours to reply to email? Will one of more partners work daily or will content and anything non-interactive be scheduled in advance?
6) Agree on timeframes and have an exit plan. Talk. Discuss what’s fair and reasonable e.g. “If the site isn’t live within 6 months, either of us has the option to walk away clean, owing nothing but 30 day’s notice.” It’s also good to have a review period of say 6 or 12 months where once or twice a year all partners look at their contributions and where things are and decide if they’re happy with things. If they are, great. If not, it leaves room for positive, healthy dialogue about what can be done to improve things so everyone’s needs are met and the partnership can continue.
7) Know what your deal breakers are and when to throw in the towel. Just like a marriage, a business partnership needs boundaries and has deal breakers. Some examples might be spending money without discussing it first, hiding things from another partner, failing to do one’s job for a certain period of time, refusing to do work or being insubordinate, etc. Sometimes relationships fail and it’s time to call it quits despite the best intentions of all involved.
8) Be fair. Know from the start that your partnership may fail but remember that the other person or people you’re working with are also human. Don’t diminish the value of whatever they’ve contributed even if they’ve ultimately failed you. If one partner has stopped supplying content but the site still makes money and you want to continue running it without them, offer to buy them out or perhaps continue to send them a reasonable amount each month as a payoff for signing over their ownership. If a designer or web person stops doing their part, explain that they need to do their part or offer to pay them for their design work, marketing work or whatever they’ve provided.
A lot of partnerships might not work out, but the upside of all of this is that those that do are often very rewarding. As we’ve seen with many of the most successful business of all time, the right pairing of minds and good intentions can result in pure magic. Like any successful relationship, constant open communication at all stages is the key to a long and happy union.
AJ Hall is a 15-year adult industry veteran, winner of the 2016 XBIZ Tech Leadership Award and CEO of Elevated X Inc., a provider of popular adult site CMS software. Hall has spoken at industry trade shows and written for several trade publications. Elevated X software powers more than 2,000 leading adult sites, has been nominated for more than a dozen industry awards and won the 2012, 2014 and 2015 XBIZ Award for Software Company of the Year.