Positives and Perils of Partnership

Picking the wrong partner can make your day seem twice as long, but the right partner can make your business thrive and journey along the way that much more enjoyable. 

In life have you ever had a friend that you would do anything for? Or a friend that you know would do anything for you? How did that knowledge alone make you feel? I bet that lightens your load quite a bit…it’s the same thing with Business.

Support from Chip is what allowed me to dive into this Real Estate Investing world. I knew that he supported everything I did and would help me anywhere I needed. We both bring different strengths and weaknesses to the partnership & our marriage as well. During disagreements, we listen to each other’s arguments and do not let pride get in the way of finding the right solution. And after all this time, we’re not only 50/50 business partners, but best friends. 

I think there is a point in any partnership where you just find a comfort level. You find a level of respect and recognize the other’s opinions and strengths. We give in to each other when the time is appropriate and we know the other one is correct. 

Trust and respect are also important. Sustaining a great partnership isn’t easy. It requires communication, trust and diplomacy. The right business partner can share challenges and help alleviate the burdens of workload, personal cost and growth. The wrong partner can tear a good business apart – and create emotional, financial, and professional chaos. 

Like a romantic relationship, getting involved simply because you don’t want to be alone is not the best reason to choose a partner. That alone will often lead to failure and wasted time and effort. Not to mention the failure and dissolution that follows is often complicated and painful. Emotions are high, intelligence is low, and you’re thinking about getting your hands on what you can, including your partner’s neck. 

The crucial ingredients, successful entrepreneurs say, are fairly simple: 

Find a partner whose strengths cover your weaknesses and whose work ethic matches your own. 

Split the business fairly but unevenly (not always 50/50)

Get every last detail of the partnership down in writing

Plan for the future of the partnership’s end….

Then keep your fingers crossed.

Chip and I have different styles and personalities, but we probably already know how the other one will think about something before it happens. I won’t say we are of one mind, but we function as on mind. There’s great trust, and that makes it work. 

First a small warning about working with family…This can be a good thing, but more often than not I see these relationships struggle due to other emotional issues, baggage, or other family member’s influences. 

Here’s an example of working with family….two sisters or two brothers in law…

All may be great at first and you’re having a great time and making money. You truly believe that you can make this work and you can keep your business life and family/personal life separate. Right, WRONG! Now what happens when someone gets sick or someone’s marriage fails….now what. Do you think that will affect your business? Probably! There are going to be hurt feelings everywhere, either for resentment or guilt and then the addition of taking sides. 

Now, I’m sure you’re all still hung up on the “Not 50/50” comment above…

Anyone?

The problem with exactly 50/50 is there is no clear decision maker. That means if there is a disagreement, there would be a stalemate with no one to break the tie. Now I’m not saying there shouldn’t be communication. Business should be discussed between bother partners. Even if there is a decision maker for each area of the business there needs to be a head to get the final say. This final say shouldn’t be all ruling, it goes back to being open and respectful, but time and money can be wasted if decisions cannot be made in a timely manner. 

How about varying levels of work ethics?

Often we go into a partnership assuming that we’ll both put in the same about of capital, hours, ownership, responsibility – really time and energy. Sometimes you cannot measure success based on time alone. This is true with Carol Stinson and my partnership. I would find the deals and she would find the buyers. We didn’t pay attention to how much time and energy the put in because we trusted each other’s dedication to success. Carol is a master at building a buyers list and who was I to critic that? Also, I had built relationships with a bank that I could easily access potential deals for us and I wasn’t afraid to negotiate like crazy. If we quibbled over who was doing more we wouldn’t have ever succeeded working together. 

Finding the right combination can take a lot of attempts. Have you ever tried to partner up with someone that constantly asked “What’s in it for me?” I know I sure hear that a lot from Realtors these days. I ask them to do something that would take them less than 20 minutes and they spend 20 minutes discussing why I need it and why they should do it when they could have had it done by then. So “What’s in it for me?” is the wrong question when you’re building a business and you’re not quite sure where it’s going right off the bat. The right question is “How can I contribute?” 

So let’s wrap up with an Andrea brainstorm from earlier today…

Issues that need to be addressed in a Partnership Agreement:

Details in a clearly written business agreement can help any partnership run more smoothly – and take the pain out of an eventual separation. I recommend running it by an attorney for other tips, but here are some ideas from me:

1. The amount of equity to be invested by each partner. 

2. The type of business and each partner’s roles.

3. How profits and expenses will be divided.

4. Partners’ pay and other compensation. 

5. Distribution of assets upon dissolution.

6. Provisions for changing or dissolving the partnership.

7. A dispute settlement clause.

8. Settlement in case of death or incapacitation.

9. Restrictions of authority and expenditures.

10. Length of the partnership.

I hope this gives you some excitement of finding a good partner…Gives you a realistic look at partnerships (removing the shiny images that usually go away after some trials and tribulations anyway)….

Finally, take a bit of caution before “jumping into bed” (business bed) with anyone.

Best of Success ~Andrea

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