You get a volatile, dynamic and sometimes rewarding phenomenon: the business partnership.
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.
But if there's anything that rivals the staggering 50 percent divorce rate of married couples, it's probably the failure rate of business partnerships-though you won't find any reliable statistics to back that up.
Most of us don't have to scroll too far on the mental Rolodex to come up with acquaintances who used to be someone's partner.
John Blickle, who served for three years as president of Sorkin Thayer & Co. in Akron, couldn't imagine ever being in a partnership. "As an accountant, I saw a lot of horror stories I just didn't want to be a part of."
Today, however, he is half-owner of the well-known enterprise Heidman Inc., which runs 30 McDonald's franchises in Greater Akron. His partner, Richard Heidman, founded the company more than 40 years ago.
If longstanding marriages are harder to find nowadays, longstanding partnerships between unrelated, hands-on owners is even harder. How do the successful ones make it work?
SBN talked with four sets of partners, each facing a different set of circumstances. Within their success stories you'll find some common threads, based on principles of mutual respect, compromise and commitment.
Picking battles with care
Richard Heidman and John Blickle
Heidman Inc. dba McDonald's
When McDonald's corporate office this summer rolled out plans for a throwback promotion in which the workers would wear tie-dyed shirts, John Blickle cringed. Oh, he liked the idea, but he wasn't eager to spring it on Richard Heidman, his partner in 30 McDonald's franchises in Greater Akron.
At 77 years old, Heidman is Blickle's senior by 30 years. Blickle knew that his partner's age and old-fashioned work ethic would combine to make him explode at the thought of seeing his workers in tie-dye.
"I knew Monday morning at 8 o'clock wouldn't be the right time to talk to him," Blickle smiles. When they did talk, Heidman reacted as Blickle expected. "He said, 'No, it would look like hell. You don't want to buy something from someone wearing a T-shirt like that.'"
While Blickle favored the idea, he had already decided not to push it if Heidman felt too strongly.
That diplomacy is a staple of their business relationship.
"Some things are really critical to Richard but not as much to me," Blickle says. "If either one of us feels strongly about something, we'll say so ... Invariably it works out."
"We're both control freaks," Heidman laughs. "It's amazing we get along."
For the record, Heidman did grudgingly agree to the three-week tie-dye promotion because he thought the teen-age workers--who are well aware of how in-demand they are in this tight labor market-might enjoy it. "It's something that's different and keeps them interested," Blickle says.
While he's glad his partner agreed with his idea, Blickle notes, "It's not about winning or losing. If it had gone the other way, I'd have been OK with that."
Heidman says a good partnership should be built on respect. For them, that means understanding what's important to the other person. "Give in when you have to and fight when you have to," he says.
That respect also means appreciating the other person's areas of expertise. In their case, Heidman is the McDonald's veteran who is battle-tested when it comes to marketing and politics. Blickle, an accountant and lawyer by trade, has gained expertise in operations and today handles the general administrative responsibilities. "I might have an idea," Heidman says, "but he can come up with very good reasons why it's not good because it would hurt the bottom line too much."
Heidman and Blickle are also careful not to second-guess each other once a decision has been made. A comment that's strictly off-limits to both: "I told you so."
For example, Blickle recalls a difficult time several years ago when an employee was failing at the job, even though the person was well-liked. Heidman wanted to fire the person and Blickle resisted. That went on for three years, until Blickle finally concluded the situation had to be addressed.
"I just told him he was right and I was wrong and that was it," Blickle says. "He didn't throw it back at me."
Blickle joined the company in 1983 by buying out the interest of four other partners. At the time, Heidman owned 18 McDonald's. With nearly double the number today, the company employs 1,500 people (equivalent to 800 full-time employees).
Blickle acknowledges he was apprehensive about becoming anybody's partner, but says today, "I've never had an issue that I wasn't treated fairly on."
While Heidman had equity partners before, none were active in operations. Having a hands-on equal stirred his fears about coexisting, but under McDonald's Corp. requirements for franchisees, Heidman had little choice as he started to look toward succession. Owners must be active operators. "It's been better than I thought," he says. "Two heads are definitely better than one."
First friends, then partners
Linda Littler and Laura Carey
Carey & Littler Staffing Inc.
Linda Littler and Laura Carey started Carey & Littler Staffing Inc. two years ago knowing almost nothing about running a business. But the two felt confident because they knew each other well.
Their unexpected path to ownership occurred after Littler was fired from a temporary staffing firm, where she'd been for seven years. In a show of support, Carey quit the same company three days later-after working there five years-and announced they would form their own company.
It seemed logical because together they knew the industry. Littler had worked on placements; Carey had worked in outside sales. For five years, the women had worked side-by-side and, despite a 14-year age difference, they had become close friends.
"We had sort of a partnership even before we were partners," Littler says.
"It was such a natural," Carey says, "because of our work habits and ethics and friendship. When we clash, that is our foundation."
Carey & Littler have a somewhat unconventional partnership: They own equal shares even though Carey works only part-time in the office so she can maximize time with her three children, ages 3, 9 and 11. She spends about 20 hours in the office, and puts in perhaps 15 more at home, while Littler holds down the fort full-time in the office.
They reason that the pendulum will swing in a few years when Carey's children are all in school and Littler scales back to take care of an elderly aunt.
Littler acknowledges the arrangement is less than risk-free, and says people are surprised to find they have equal ownership. But it goes back to the friendship and trust.
While they haggled about whose name to put first in the company, Littler eventually agreed to put Carey's first for the practical reason that it appears earlier in alphabetical Yellow Pages listings.
Littler says it's important for prospective partners to iron out basic goals and philosophies ahead of time. But Carey goes a step further. "I would never have started the business with her if I hadn't known her for so long."
The women spend a good amount of time together outside of the office, too. Like many partners, they say they usually know how the other feels about an issue. In their case, one often catches herself finishing the other's sentences.
While their start-up phase has been successful-they became profitable at seven months and have opened a second location-they realize sustaining a business is even harder than starting one.
They agreed from Day One on a way to keep the peace in case they ever encountered a colossal disagreement. "We sa id if we ever had an impasse, we would hire a mediator to work it out," Carey says.
Knowing they have that option helps them discuss issues more freely. "It's a safety net," Carey says. "We're glad though because we haven't had to use it yet."
Left brain meets right brain
Marie Collins and Kathy Gargoline
Control Systems Inc.
For 22 years, Marie Collins ran Control Systems Inc. with her husband Ray. When he expressed interest in semi-retirement three years ago, she sought out a hands-on partner, even though she and her husband still owned the whole company.
She turned to Kathy Gargoline, a 17-year-employee who had started at Control Systems as a receptionist and progressed over the years to assistant accountant and then director of finance. Gargoline was promoted in 1995 to general manager, with responsibility for day-to-day operations of the Hudson ignition-equipment manufacturer. Collins, who is president, focuses on the big picture.
While Gargoline didn't own any equity three years ago, she was passionate about Control Systems and took some of the credit for its growth. "I already felt like I had ownership," she says.
For her part, Collins says, "I trust Kathy's judgment like my own."
Collins this fall decided to formalize those sentiments by making plans to offer a minority interest to Gargoline and possibly to a couple other key employees as well.
Collins sees the move as a sort of reward for two decades of dedication. But in reality, she has considered Gargoline a partner for years.
"A lot of companies, when they're small and family-owned, they like to have their hands in everything," Gargoline says. "I've had the flexibility to basically run the company as it needs to be run."
Collins and Gargoline say they've made their relationship work by focusing on their own areas of the 10-employee manufacturer. Collins handles strategic issues and marketing. Gargoline handles finance, including monitoring cash flow and margins, as well as daily operations.
It seems to be working: The first year after they entered their new roles, sales grew 20 percent, followed last year by a 38 percent increase.
"I might look at what we want," Collins says. "She's looking at what we can afford."
She describes it as a powerful combination of left-brain/right-brain personalities. "We're a good match that way," Collins says. "I think it would be detrimental in a small company if you had two people who thought a lot the same."
The women say they do have disagreements occasionally but work through them logically. "You need to listen to each other and you need to look at the issue from the other person's perspective," Gargoline says.
And once a decision is made, it's a joint decision. They succeed together and they fail together. "It's not, 'You shouldn't have done this. 'It's more like, 'We shouldn't have done this,'" Collins says.
Gargoline adds: "We learn from our mistakes."
Values steer the relationship
Vince DeCarlo and Frank Paternite
DeCarlo, Paternite and Associates Inc.
Vince DeCarlo and Frank Paternite were co-workers for one year in 1973 at Tremco Manufacturing in Cleveland in the fledgling field of computer systems.
The two went their separate ways and met up again a few years later on a moonlighting project in Chicago.
In 1976, they formed DeCarlo, Paternite and Associates Inc. as a two-man company developing custom software for manufacturing applications. Today DPAI is the oldest and one of the three largest privately held information technology consulting firms in Ohio, with sales nearing $20 million, 170 employees and offices in Independence, Akron and Orlando, Fla.
Even though DeCarlo is president and Paternite is vice president, each owns 50 percent of the business.
One of the secrets to the longevity of their partnership has been dividing the primary areas of responsibility. They capitalize on their own strengths and stay out of each other's hair.
Paternite oversees technology and legal matters while DeCarlo handles sales and marketing and finances.
"That's pretty much the line we divided," DeCarlo says. "To make a partnership work, you each have to have your own role, and those roles have to complement each other."
"Vince is the visionary," Paternite says. "I'm more the analytical type who figures out how to make it work. He's the dreamer. I act as a pessimist. Together we come to an understanding."
"I dream about all kinds of stuff," DeCarlo laughs. "Frank's role has always been to bring me back to reality."
DeCarlo says their ability to sustain the business revolves around three values: communication, dedication and determination.
"Our communication skills are textbook," he says. "We have an open dialogue and each person is given the opportunity to make his case.
"There has never has been a decision we haven't been able to agree on," he adds. "We might have to go have a cup of coffee. Sometimes we might even have to go down to the bar, and it might take two or three drinks, but we come together."