When starting out as an entrepreneur, it’s often tempting to not want to go it alone and think about bringing on a partner to shoulder the workload — and perhaps some of the stress. It’s worth noting, however, that not all business partnerships are created equal. Many times, it can be far better to struggle alone than to be saddled with a business partnership that’s toxic or unproductive.
That said, how do you know whether or not a business partnership is a good one? What can you do to ensure your future partnership doesn’t dissolve into chaos? And is there a way to rescue a business partnership gone sour?
Here are four ways to boost the chances your business partnerships are positive, productive and profitable.
The Secret To Successful Business Partnerships
1. Pay Attention To Everything
There’s a “honeymoon” phase in all relationships (including business relationships) where everything looks wonderful, and you seem perfectly suited for each other. However, it’s important as a savvy entrepreneur to not be fooled by first (or second) impressions, and take the time to get to know somebody before entering into a business partnership. This isn’t because people lie — though some do — but because everybody wants to put their best foot forward, especially in the beginning.
Spend time with potential business partners, perhaps over coffee or dinner, and pay attention to personality red flags that come up over the course of conversation.
- Do they seem overly emotional?
- Do they blame others for where they are in life?
- Do they try to control every aspect your interactions?
- Are they obsessed with profits over creating a sustainable business?
Don’t blind yourself to future business partner red flags by hoping upon hope that a venture will work out. Take the time to get to know would-be business partners and, above all, trust your gut. It will save you time, and a whole lot of money, in the long run.
2. Find Your Opposite
One common mistake would-be investors make when creating a business partnership is looking for potential partners that share their same strengths, assets, and personality traits. And while this can make for a comfortable work environment — and great chats over coffee — it doesn’t usually translate to real estate investing success.
That’s because the true function of business partnerships is to let you spend time on areas of the business that utilize your strengths — not to spend time in areas tied to an activity that you aren’t very good at.
As Sara Blakely, CEO of Spanxx, shared with Business Insider, the secret to entrepreneurial success is to “Hire your weaknesses. What you’re not good at is usually what you don’t like.”
If you enjoy negotiating, but can’t stand looking at spreadsheets, find somebody who brings a left-brained approach to things. If you like working with contractors and doing inspections but can’t stand copywriting, find somebody who’s in touch with their inner Shakespeare.
This doesn’t mean you can’t be a “solo-preneur” as a real estate investor. The big advantage to going it alone is you don’t have to split profits with anybody. Just know one thing: if you are going to set up a business partnership, make sure each side has a unique and valuable asset they can contribute.
3. Get On The Same Page As Early As Possible
Many business partnerships fail not because one or both parties were incompetent or devious, but because expectations (and guidelines) weren’t clearly defined before the partnership was created.
This means articulating (in writing) things like:
- How the business partnerships is structured (legally and financially)
- A business and marketing plan to help the partnership reach its goals
- What each partner will contribute (in terms of time, money and sweat equity)
- The values (or mission statement) of the partnership
- Exit strategy (Nobody thinks they’ll need one, until they do)
Handshakes are nice, and they can be a good first step to establishing a partnership, but they ultimately are no substitute for cold, unemotional and effective documentation for how the business partnership will operate.
4. Find Somebody With Fire In Their Belly
Though there are many important factors that contribute to a real estate investor’s success, one of the most important is self-motivation. There’s just no substitute for an entrepreneur who’s determined and motivated to find success — not matter what comes their way.
While it can be tempting to choose a business partner who has the right market knowledge, skills and connections, in the long run, many of these elements can be honed and sharpened. What often can’t be sharpened is the amount of urgency, or fire in the belly, that a would-be business partner brings to the table.
This can be a difficult trait to define, either in a partner or yourself. However, if the person you’re thinking of bringing on as a business partner talks endlessly about the following, you may be better served by finding someone else to take this real estate investing journey with:
- The amount of obstacles you’ll face
- The amount of time you’ll need to spend
- The lack of resources, time, money or expertise your partnership has
It’s far better to know the person you’re navigating the choppy waters of investing doesn’t quite have the mettle required before you set sail.
“You Complete Me”
The best business partnerships are not those in which both parties agree completely, or even have the same personality, but rather those that complement each party’s shortcomings.
Successful business partnerships are based on respect and an understanding that each member of the partnership brings something valuable to the table, and that as a partnership they are stronger (from a business standpoint) than they would be separately.
If you’re lucky to have found someone like that, you might be on the verge of taking your business to heights that aren’t possible by yourself. Just be sure you do your research and look for any warning signs, or you’ll find yourself in worse shape than you were before.