The Right And Wrong Way To Start A Partnership

Many advertising people think about starting their own company.  There is a right way and a wrong way.  To illustrate, I would like to share a story.

Two well-known creative people approached me to find them an account person to be their partner.  Both had been working together at an agency which was well known and successful.  It was a west coast agency with a New York office.  The management of the west coast had decided to close the office.  The issue was that they were able to take some accounts (but lose others) and needed someone to run the accounts and the business.

They felt that the income generated by the business that was staying would not be enough for them to continue their lifestyle. The fees generated by those accounts were enough to give them each a six figure income. The account partner they were looking for would be tasked with finding, pitching and generating new accounts.  They would then share that new income, while keeping the income they already had for themselves. 

Wrong.

In effect, what they were asking a new partner to do was to sacrifice this or her own income wile supplementing theirs.

Unfortunately, I hear that story in one form or another, all the time.  Creative people have the ability to generate income through freelance. Most freelance activity can be handled during off hours (if the creative people are otherwise employed) or on the weekend. Account people rarely have that opportunity and on the rare occasions when they get a freelance assignment, the account manager must work full time.  

In order for the partnership to be successful and the business to prosper, the parties involved have to be totally committed both to each other and to the business.  Whatever income comes in has to be drawn equally, even if that income is freelance for the creative – the account partner is enabling them to have the opportunity to start a business. That enablement is worth money, or should be, to the creatives.

Years ago, when I had my agency, this is the arrangement I had with my partners.  It was fair to them and fair to me.  In the early days when the business had almost no income, they freelanced and gave me a third of what they generated.  As the business grew, we all agreed to draw money equally. If someone wanted a hundred dollars, for whatever reason, than the other two took a hundred dollars each. 

By doing so, it avoided anger and resentment and kept the partnership whole.  And more than that, it kept us all friendly and financially content.  At times the equal draw principal did cause some problems – especially when the partner with kids in private schools had to come up with tuition.  But we managed to work through it.

I told this story recently to a very good friend of mine, an account person, who had started an agency with two creative partners.  He came to me because he was going through his savings rapidly.   His cohorts were freelancing and had income.  My comment was that, if they were really committed to building a business, hey had to find a way to share all the available income during the start-up period.

When he told me that they were unwilling to share their freelance, I had to tell him that they were not truly committed to the business or the partnership.  In a good partnership, the partners are always equal and draw equally.

It is almost always the creative people who generate the product for an ad agency.  It is always the account person who runs the business, manages the clients and generally enables the creatives to do their thing.  That is worth equal pay.