Going the partnership route offers many advantages as well as challenges.

One small business that has successfully solved the partnership puzzle is Cavanaugh Hagan & Pierson (CHP), and what these three entrepreneurial women have learned in the course of doing just that offers many important lessons to other business owners thinking of going the partnership route. The company name has the ring of a white shoe law firm. And, in fact, one of its principals is, indeed, an attorney, and CHP does provide counsel, though not of th legal sort, to many leading private-and public-sector organizations. Its recent client list includes Houghton Mifflin, the International Monetary Fund, the U.S. Bureau of the Census, and the Nathan Cummins Foundation, to name just a few.

CHP is a management and organizational consulting firm that specializes in strategic planning, meeting facilitation, training and leadership issues. Its principals--Denise Cavanaugh, Ann Hagan, and Jane Pierson--describe what they do as "outcomes-oriented strategies," and the firm's record positions it as one of the very best in its field. One of the things that sets CHP apart from other professionals in the relatively new field of organization development consulting is the fact that it is a firm at all.

In fact, when CHP was formed about 13 years ago, the partners could find no existing business of this type to emulate. As a result, they had to develop their own model in order to launch their business--a process that involved some very creative thinking and novel approaches to classic business situations. Their efforts have been such a success that today other firms are adopting their model.

When you can't find the business model you need, you may have to create one.

The first lesson here for aspiring entrepreneurs is that when you can't find something you need to start or grow a business, one option is to create it yourself.

"One of the first challenges we faced as a firm was building relationships among th three partners." Cavanaugh explains. "Each of the other two partners knew me, but they didn't know each other, and they came from decidedly different backgrounds. The first question we had to answer was how to turn this from three separate people into a true threesome."

Cavanaugh had been in business as a consultant for a dozen or so years when Hagan and Pierson agreed to form the firm. An attorney by training, Hagan had served for seven years as director of human resources for Booz, Allen " Hamilton, a leading management consulting firm. Pierson, founder and former executive director of the National Women's Political Caucus, had worked in legislative and political affairs for labor unions and as an advisor to nonprofit organizations, corporations, and political campaigns and candidates. Their two worlds rarely intersected.

Complicating the situation was the fact that both Hagan and Pierson were coming from higher-paying jobs with strong support organizations into an entrepreneurial arena where they would be expected to do such mundane tasks as making their own photocopies. In fact, as part-owners of the fledgling firm, they would have to help decide whether or not they could even afford to buy the copier.

Sometimes a passive approach is best for addressing people problems.

The solution they came up with was to establish a relationship of peers and embody it in the form of a corporation. As the original nucleus of the business, Cavanaugh holds 40 of the corporation's stock, the other two partners 30 apiece. Each receives an equal monthly paycheck, with additional remuneration calculated in a innovative manner. (More on that later.)

Given their different backgrounds, it was expected that it would take some time for Hagan and Pierson to develop a relationship of trust with each other. "There are presumed biases when one partner comes out of a big name consulting company and the other comes out of a labor union," Cavanaugh relates. "As it turned out, we pretty quickly found that we all shared similar values about everything from the look of our materials to ethics to the caliber of work we wanted to do--even our attitudes toward quality of life."

As these three partners learned through experience, less can be more when it comes to addressing people issues. Sometimes a passive approach is more effective than active intervention.

With the peer relationship established, the partners faced several new challenges as the business began to grow. Methods had to be developed to allow each partner to gravitate toward her own area of expertise and to compensate them for the work they did in those areas. Since every project the firm accepts is managed by a CHP principal--and time is a finite quantity--decisions had to be made weighing growth against their commitment to that hands-on philosophy.

Cavanaugh is the firm's resident (or nonresident) peripatetic and the acknowledged rainmaker. She began her career as a "hands-on catalyst for change," as CHP's brochure describes her, working with the Peace Corps in Peru, later with Headstart in Chicago and VISTA in Appalachia. Pierson is the managing partner, the one who signs the checks and works with the client services people to develop good business systems. Marketing is Hagan's bailiwick, and she specializes in balancing complex organizational dynamics. She designs and implements training programs on leadership and team building, as well as gender and work force diversity.

Thinking outside the box fosters creativity and flexibility in organizations.

The method they have devised for compensating those duties is truly inspired. As mentioned, each takes an equal monthly paycheck. The rest of the firm's net income is disbursed based on "an equation divided by the function," as Cavanaugh puts it.

There are four factors in the equation: managing the firm, marketing, generating revenue, and stock ownership. At the end of each year, after all the bills are paid, staff compensated, and retirement plans fully funded, the partners decide how to allocate the remaining funds among each of the four equation factors. For example, stock might get 5, marketing 10, management 20 or 25, and revenue generation the remainder.

Then they go down the list and decide how much of each "pot" goes to each partner. Since Pierson is the managing partner, she might get 80 or 85 of the management pot. Likewise, marketing maven Hagan gets most of the marketing pot. The revenue generation pot is allocated based on each partner's actual contribution in that area during the year, and the stock pot split mirrors their 40-30-30 ownership shares.

"The compensation structure allows each of us to have different roles," Cavanaugh says. "It allows me to say I don't want to manage this business; let's pay Jane to do it. It allows us to say we want to spend more or less each year on different aspects of the business. It is very important to maintaining our peer relationship without everyone having to de everything absolutely equally. Each of us can have a big year or a small year and not feel guilty about it."

It is important that each partner in a business find an area of expertise.

An therein lies another important lesson for budding business owners: thinking outside the box in one area, such as compensation, can foster flexibility and creativity in other areas throughout an organization.

The question of growth has been a difficult one, but the partners are using a variety of creative techniques to deal with it. Over the years they have added another consultant, Joshua Mintz, and two full-time staff people. They have also recruited a group of other consultants who work for CHP as subcontractors on an as-needed basis. this allows them to maximize their client load while continuing to insure that each client deals with a principal of the company.

CHP's principal-focused business strategy means each partner's resources are taxed to the limit. "Clients buy our time, creativity, energy, and ability to walk into a situation and identify a problem in a very short period of time," Pierson explains. "We work tough schedules, a lot of weekends, and we fly all over the country. The upside of our business is that we have a lot of it, but that's the downside too."

That kind of life sounds like a prescription for "burn-out." the partners are keenly aware of that and have developed a series of coping mechanisms to avoid that fate. They meet every month and get together for dinner once a month. "So even though we are all working on different things at any give time, we see each other at least twice a month, and that helps us stay focused on the business," Pierson says. They meet regularly with others in their field, taking training courses, teaching, and working to understand their field better--a process they call "development."

Along with CHP's annual partners retreat, the company also has a sabbatical program that may be the only one of its kind in existence. What is unique about it is that it is mandatory. Every year, one of the partners is required to take six weeks off and do anything she chooses--as long as it is not work-related. At the time this article was being prepared, for example, Hagan, an avid photographer, was unavailable for interviews because she was spending her six-week sabbatical touring China, Burma and Vietnam. Pierson user her last sabbatical to pursue the bird-watching and hiking activities she loves in the Canadian Rockies.

"This is important, This is required," Pierson explains. "You don't have to go anywhere. You could sit in the house and read, but you have to do it. We believe that if you don't do it, it will be very hard to maintain the energy level you need to keep up with the pace of this business, meeting new clients and bringing a sense of creativity and energy to clients that have major problems."

To achieve top performance in business, don't neglect other areas of life.

The partners often deal with clients that have lost a lot of hope. "They may be on the verge of collapse or a major reorganization or takeover because things are not going very well," she says. "We have to be positive. We have to be able to go in there with energy, enthusiasm and new ideas. To be able to do that on a regular basis, you also need to take time off and recharge your batteries on a regular basis."

As Denise Cavanaugh, Ann Hagan, and Jane Peirson have discovered through almost a decade-and-a-half of successful business ownership, achieving and maintaining maximum performance in business requires regular care and maintenance of the other aspects of your life. That, they agree, may be the most important lesson of all the many they have learned across those years.