A Case Study of an Unsuitable Partnership

A Business Leader & a Franchisee

This case study begins with two friends who worked at an organization as employees. At some point, they decided to start their own business together – a business where they would be partners on equal footing. They had a small start-up capital for their enterprise. With that capital, they began doing business in the fields of wholesale trade and small-scale transportation. The level of competition in these fields was moderate. Eventually, the company hired two employees. Within two years, the company was making a small profit. However, then the state of its finances began to deteriorate, even though the partners tried running the business in different ways.

They finally went to seek out consultation when the company’s situation became critical and the partners’ relationship became tense. The entrepreneur types of both of the partners were determined using Humanmetrics Entrepreneur Quiz™. It turned out that one of them fit the description for the Business Leader type, while the other matched the profile of a Franchisee. Indeed, Humanmetrics Entrepreneur Quiz™ results do not identify such a partnership as favorable for business. In this particular combination of business types, the partners' entrepreneurial qualities do not complement each other.

Afterwards, the friends’ entrepreneurial quotients (E.Q.) were assessed using the quiz from Northwestern Mutual Life Insurance Company. The entrepreneurial quotient is intended to indicate how suited a respondent is to entrepreneurship. The results turned out to be rather high for both partners - +27 points for one and +15 points for the other. In this case, the Northwestern Mutual quiz suggested the following:

“Your background, skills, and talents give you excellent chances for success in starting your own business. You should go far."

However, as we saw, their enterprise was actually unsuccessful. As it appears from both results, an unsuitable partnership was responsible for this failure.

The partners were advised to end their partnership, and instead to run two separate businesses that suit their individual business types. They proceeded to go about their business according to this advice. The Franchisee began to work independently and gradually grew his transportation service. The Business Leader purchased a store and was gradually expanding his business. He found a new partner whose business type is an Executive Manager; this partner also has a smaller share in the business. According to the entrepreneur type descriptions in Humanmetrics Entrepreneur Quiz™, a partnership with an Executive Manager is often favorable for a Business Leader.

As a result of these changes, both former partners have been steadily running their businesses for at least 4 years since their separation, and both businesses remained profitable.