I have had a business partner for almost 6 years now. Lately I have noticed more and more Realtors partnering up together. Here are some things to think about when looking to get into a partnership (or are already in one).
1. Communication is key. You must be able to communicate with this person as when times get tough (and there will be tough times) communication is the key to getting through it together.
2. Friends don’t make the best partners. Just because you are friends with someone does not mean that you will work well together. Mike and I were sort of friends when we began Combustion. We worked together and have many mutual friends, but we were not best friends.
3. Partnerships are like a marriage. Mike and I have become very close over the years. So close that when in meetings we don’t need to speak to each other and we can see what the other is thinking about. (works well for negotiating) You have to be prepared to have your business partner know everything about you. Things like the amount of money you have personally, girlfriend status, family relationships, etc. All of these things are important and both partners must be aware of what is going on in the others life.
4. Partnership to me means 2 people. You can have more than 2 people in a partnership but I think that it is asking for trouble (unless carfully structured). 3 Realtors, for example, working together can be difficult, especially when decisions are being made as usually it is 2 on 1. Don’t get me wrong, it can work and I know of situations where it does but to me it is more trouble than it is worth.
5. Job Descriptions are required. Who is doing what and what is each partner responsible for are very important questions to have answers to. You don’t want to get into a situation where both partners are assuming that the other is doing a specific task – and no one ends up doing it. This also comes back to communication but having job descriptions written down will stop any confusion in the future.
6. 3rd party problem solvers. Mike and I have an agreed list of 3rd party problem solvers that we refer to if we can’t come to a decision ourselves. For example if we have a business question we go to our “business guy”. Whatever he says, we go with. Same for accounting, legal, human resources, etc. We go to a predetermined person that Mike and I have agreed that whatever their decision is, we will go with it.
For the record, we have yet to use this system… but it is good that it is there.
7. All expenses must be approved by both partners. This is very important and can ensure that there are no money problems within your partnership. Even the smallest expenses must be approved by both parties. This way all funds spent are accounted for and if there is a bad purchase made, both parties are responsible. The last thing you want is to have money problems within your partnership.
8. 50 – 50 split. If it is any different that this… then one person is in charge and the other is working for that person… which to me… is not a partnership. Partners, like marriages, are equals. I am of the mindset that if the split is not 50-50 then you must have very specific rolls and job descriptions written out at the begining.
These are not meant to be “golden rules”. They are better thought of as items to think about within your partnership. You may do things differently and that is ok and it might work for you. These are some of the things that Mike and I have created to ensure our success as partners.