If you are considering launching your own business (or even if you already have an established company), acquiring a real estate business partner can be extremely beneficial.
Not only are partnerships relatively easy to establish, they also have the ability to take your business to the next level. Starting a business with another person means more access to funding (as you both have your own set of pre-established contacts and potential investors). If you have limited capital, your real estate business partner will be there to make up the difference. This is more money in both you and your partner’s pockets.
Secondly, when you take on a partner, you are gifted his or her pool of resources. Perhaps you excel in the operational aspects of a business. That’s great, but not great enough to run a business. This is where a partner comes in handy. Find a person with outstanding managerial and acquisition skills and you won’t have to waste precious time compensating for your weaknesses. If you get your hands a partner whose strengths are opposite yours, there’s no telling how far your business will go.
Lastly, the establishment of a business partnership means shared responsibilities. Entrepreneurs are undoubtedly busy people. They like to try and fit 30 hours of work into a single. Not only is this a detriment to the body, it is also a detriment to the business. If a partner can carry half your load, that means more energy to be used in more productive areas of the business.
With these benefits in mind, you’re probably ready to get in your car and find a business partner this very second. Before getting too excited, make sure to avoid these common mistakes before getting started:
3 Real Estate Business Partner Mistakes To Avoid At All Costs
While acquiring a real estate business partner has the potential to improve your business, it also has the potential to destroy your business if not executed properly.
Simple mistakes, like failing to put things in writing, can wreak havoc on your business in the future. So avoid these mistakes at all costs and your business is sure to flourish (so long as you commit to open communication, frequent dialogue, and mutual respect).
Incompatible Long-Term Goals.
When first establishing your partnership (especially if you are doing so with a friend or family member) everything will seem fun and exciting. While this a great mindset to be in when starting a business, it can lead to you and your partner having incompatible long-term goals. At the beginning of your business venture, partners are usually optimistic of their chance of success, which can result in forgetting to discuss important outlooks on the future. Ask your partner important questions like:
- “What is your number one goal in this partnership?”
- “How do you define success?”
- “Where do you see this company going in 5, 10, and 20 years?”
- “How many hours per week can you commit to this business?”
- “Will you let personal affairs (i.e. death, divorce, poor health, etc.) affect your business practices?”
- “How do you handle stress/manage complications?”
While these serious questions may feel uncomfortable to ask, they are necessary if you expect your real estate business partnership to survive. The last thing anyone wants is to be two years into a partnership only to be gridlocked by disagreements. You and your partner’s goals do not have to be identical. However, you should be on the same page to avoid future conflict.
Lack Of An Exit Strategy.
A crucial step to take when establishing a real estate business partnership is creating an exit strategy. The last thing on anyone’s mind when setting up a partnership is leaving the partnership. But discussing these terms will be essential if the partnership ever disintegrates. No matter how successful your business becomes, there will come a time where you’ll eventually be forced to turn the business over. Whether you are offered a great deal on a sale, the partnership goes sour, or circle of life results in a death, you must know how to cope with difficult situations. When drafting your partnership agreement (as putting things in writing is an absolute must) be sure to discuss appropriate exit strategies. Will there be restrictions around who you can sell the business to? What will happen to a partner’s share if he or she becomes medically incapacitated? Talk about these questions before signing your agreement.
Failing To Identify Specific Roles
If you’re ready to take on a real estate business partner, chances are you already know both you and your partner’s strengths and weaknesses. However, if you want your business to succeed, it will take more than simply understanding what you are and aren’t good at. It is key to pinpoint you and your partner’s specific roles to avoid confusion down the long. Nobody wants things to get messy. If your partner is an exceptional accountant and knows how to organize finances, call him the CFO (chief financial officer). If you excel in marketing and lead generation, give yourself the label of CMO (chief marketing officer). Be sure to lay out each person’s roles and responsibilities and set weekly meetings to keep track of everyone’s tasks. This will keep your business running smoothly without wasting time making every decision yourself.
Acquiring a real estate business partner has the potential to take your business to a competition-crushing level, so long as you be sure to avoid these three common mistakes.