5 Steps For Finding The Right Business Partner
“You can’t do a good deal with a bad partner.”
These words could be the most important words in life, not just in business. These are more than words of wisdom. These are guiding words, words to live one’s life by. Whenever you find a struggling business, a bad marriage, or an investment gone bad, you will find a bad partner.
This does not mean a person is a bad person, although they could be. It just means they are a bad partner, the wrong person for the task at hand.
The world is filled with good people, but they would not make good business partners. In the institution of marriage, the world is also filled with good people who are married to the wrong person. And if you encounter a truly bad person—a person with low legal, ethical, and moral values—no matter how good you might be, the business or marriage will go bad.
When it comes to business—and life—good partners are worth their weight in gold.
What Makes A Good Partner?
To me, good partners have aligned values. They are generous. The goal is that everyone in the deal prospers. And they are people I enjoy being around.
As the U.S. Small Business Administration states, “Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business. Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues upfront and develop a legal partnership agreement.”
Before moving forward with a partnership, it’s important to take the time to think about your goals, the people you are considering and what they bring to the table. After all, good partners can help you reach your goals of financial freedom faster. But if you jump into a partnership without carefully considering the consequences, a good deal can go bad fast!
How Do You Find Good Partners?
My number-one partner in everything—investing, business, marriage, play—is Kim. We don’t always agree on everything, but that’s what makes us great partners. A good partnership allows space for each partner to state their mind, give their opinions and question the other partner’s ideas. It’s a “give and take” situation.
I might not have survived if I did not have a great wife and business partner in Kim. Since 1985, we have gone through some horrifying betrayals from our partners. If not for Kim and great friends, we might not have survived the financial and emotional devastation we have had to endure. The financial cost has been in the tens of millions of dollars, nearly a hundred million, but the emotional damage has been much, much higher. To see people who were once friends and partners suddenly unmasked, people we worked side by side with for years revealing their lowest of base human behavior, is disturbing. It’s something never to be forgotten.
Here are a few rules I follow when looking for business partners
- You can’t do a good deal with a bad partner.
I repeat this because it is worth repeating. Whenever I find a business, a marriage, or a group struggling financially, I begin looking for a bad partner. More often than not, the bad partner is the leader, a person who might be a good person but a bad business partner.
- You get offered a lot of good deals when you are a good partner.
This is the positive side of the first lesson. Rich dad taught me that I would never be successful if I remained a bad partner by hanging out with bad partners. He inspired me to be a student of human nature and business, work diligently, and take life one day at a time. He assured me that if I became a good partner, good people and good deals would find me. So far, rich dad’s promise has come true. Between 2007 and 2010, during my trials with my former partner and a crashing economy, more good deals came to Kim and me than at any time previously. We made a lot of money with good people. If we were bad people with bad reputations, I am certain we would never have been invited to invest with one of the more prominent investment groups in America.
- From bad deals come good partners.
Through every bad deal, I have met a great partner. I met Ken McElroy, Kim’s and my partner on a number of larger apartment projects, through a bad deal.
If not for a bad deal put together by a bad person, Kim and I would never have met Ken. Can you see the pattern? This has happened many times in my career as an entrepreneur. So now I know. Whenever a deal is going bad, I begin to look for my new partner.
- Good people can make bad partners.
Many people want to be entrepreneurs, but they should not be invited to be part of a business, especially a start-up.
Since most people are trained to be E’s and S’s, employees and specialists, most do not have the experience, education, or emotional maturity to be part of an entrepreneurial business team. The lack of experience, education, and emotional maturity can turn a good person into a bad partner.
A friend of mine has a banquet company. He loves his business because he loves to cook. He spends every waking hour thinking about new recipes and ways to make his banquets more memorable. The problem is that he is not interested in business. He has never taken a course in accounting, marketing, finance, or business law. He is not a student of business, and his business and employees suffer for his lack of business education.
Unfortunately, he thinks he is good at business. No one can tell him anything.
When he wanted to become a part of one of my start-ups, we turned him down. He is a good person, but we did not feel he would make a good partner. I have found this phenomenon especially true with medical doctors and accountants. They feel they are good business people because they did well in school and run their own practices. Unfortunately, I have found that doctors or lawyers who are good at business are the exception rather than the rule. Hence, they make poor partners.
- Inexperienced good people don’t get invited into the best deals.
Since most people have never been part of a successful entrepreneurial venture, most people are not invited to join in the best deals. They may be invited into bad deals, deals no one else wants, but the best deals are not offered to them first.
Editor, Rich Dad Poor Dad Daily