Service Based Business Society Podcast

I am spilling the tea on partnerships, and trust me when I say I have had the good, bad, and ugly.

Show Notes

There's no sugarcoating it: business partnerships can be a lot of work. But they can also be hugely beneficial, providing support, expertise, and a fresh perspective on your business. A partner can add immense value.  Of course, not all partnerships are created equal. Some are incredibly successful, while others end in acrimony and legal battles.  After over a decade of different partnerships, I have seen it all! So what's the difference between a good business partnership and a bad one? Let's dive in because this is the partnership episode.

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TITLE:Partnerships: The Good, Bad, + Ugly

Hello, and welcome to the service based business society podcast. I'm your host for an auction. out of our weekly episodes, we will dig into everything you need to know about scaling your service based business without losing sleep.

With my experience in creating over seven figures per month, and a passion for marketing, finance and automation, this show will provide tangible tips and techniques for scaling your business. Let's get started.

Okay, guys, welcome back for another episode. This week, we are talking about partnerships, The Good, the Bad, and The Ugly. You know, over the years, I have had several different business partners, and I feel really knowledgeable on the topic, The Good, the Bad, and the ugly. And so I wanted to share because I was recently in a Facebook group. And people were talking about business partners. And then last week's podcast episode also made me think, hey, you know, there's so much to be said for partners, they can offer an incredible benefit to your business, your mental health, your mindset, but they can also be super distracting if it's not done very well.

So I thought I wouldn't jump in today and share, you know, the different pieces that I have learned along the way about choosing business partners. And you know, what you can expect in terms of the future development and growth of the partnership, he's it's super important to realize especially if you're getting into a partnership, based on friendship, or based on, you know, really a time of your life that you're going to outgrow that sometimes that can be really complicated. And often it's, you know, the partnerships that are rooted in friendship, or even worse, family that can really end up being a distraction to you overall by the end of the day. We all work, not just because we love it, but also because we want to put food on the table. And so when you have different partners in a partnership, everyone is ultimately thinking about their own interests. And as much as we want to say that, you know that it's not that way. Ultimately, in every situation, people will always look out for themselves first. And so when we get to a situation in the business, where something could potentially benefit one partner, way more than the other, often we can run into issues. So just to dive a little bit into my background, because you may not know about my previous business partners, I've had a number of smaller business relationships over the years. Most recently, you know, I am working with someone who I met online, actually. And we are doing some marketing and digital media for influencers. Influencer market is generally underserved. And so, you know, you have this group of really entrepreneurs online who are hustling hard to make it and not necessarily being, you know, served by the best technology information team. You know, often people fall into a situation being an influencer, that they never would have predicted, you know, some piece of their content goes viral. And from there, they really lean into that which I love and create more content and whatnot. But sometimes there are easier ways. And so I love bringing some of the automation technology and whatnot to the influencer market. And so I am doing that with a fellow entrepreneur and business partner who I met online. I actually took a couple of courses with her a number of years ago and look forward to having her on a future podcast episode. So through this business partnership, you know, ultimately, it was unlike any business partnership that I had worked through before, because I didn't know her other than being online. It wasn't until after we decided to work together that we actually flew across North America and we got together for three days to really hammer out our brand vision goals, colors, service offerings, all of these different pieces. And you know, it was really interesting because we had a fantastic time in person. And we really also have a fantastic time online. You know, moving forward. She truly is not just a business partner.

But I would also consider her one of my good friends, we talk almost daily. And so when you think of this random person across the country, and connecting with them over the internet, and then becoming business partners, that's a pretty big progress, progression. And so at one point, I never would have thought it was possible. And it was actually through another program, I was a part of that. Also, were two women who had met online, and who had a very successful business together, and were very opposite. And I was at that time coming out of a previous business relationship when I got to meet these two. So Jen and Courtney are the ad girls, you can look them up online. One is from Texas. One is from New York, country, girl, city girl. And they work so well together. And I think it was their relationship that truly almost inspired me to rethink partnerships. I was coming out of a sour situation where I was like, Hey, I'm not interested in doing a business partnership again. And so it was really Jen and Courtney that showed me there was a different way and that you didn't necessarily need to know the person or work, you know, and share a desk with that person in order to ultimately, really move a business forward. So through my current, you know, business partnership, we ultimately have continued to grow, you know, we have weekly meetings, we use different tools to communicate over the phone, Marco Polo is a great app that I use for clients, business partners, and whatnot. And so it really allows you to still connect, it's like a video walkie talkie app. And it allows you to connect with that still face to face connection, and work through some problems. And you know, even more through some of the tough conversations, because let's be honest, business isn't always bubblegum and rainbows, sometimes there are some tough conversations to have. And I feel like in a partnership, there's almost more of those step conversations, because sometimes you really have to rise to the occasion and say things that you probably don't actually want to say. And it really comes down to, you know, knowing each other well enough to push when you need to push, but also just back off and support when the time calls for that. So going back now, so we've we've kind of chatted about my most recent business partnership. And so, you know, to check out the work that we are doing, it's b b e media company. And, and ultimately, it's a, it was a fantastic decision. And I truly feel like although we are so opposite.

My partner and I really complement each other well. And I'm going to say that that is a key piece to successful partnership, when you have multiple people who have the, you know, this the same or very similar skill sets, you end up with, really, you know, a lot of discussion back and forth on the same point. And I truly feel like you know, a partnership that has these complementary skills. So if we go back a couple episodes, we were talking about, you know, complementary services to add value to the customer. And so now we're going to talk about complementary skill sets that can add value to the business.

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Realistically the execution of the services really falls on me. Does that mean that my business partner doesn't help with that? No, she definitely does. We will appear. But when it comes to who is the person responsible? That's me. When it comes to who is reaching After the clients, looking at the sales piece, I'm planning out a lot of the marketing and copy and whatnot. That's my business partner, liberty. And so it works really well, because we say, well, who overall is responsible for that? We still help each other. And I think that that's important, but we have a deep respect for the other person's skills in an area where we are maybe not as strong. And so although we both have very successful businesses on our own, where we do tasks that for B is in the other person's wheelhouse, so we can do it. It just comes down to what do you do and what do you naturally excel at. And so we often, you know, kind of joke and we say, you know, who's whose responsibility is what, and it's, you know, liberties job in our business partnership is to fill the freezer. She is the hunter gatherer she does what it takes and plans what it takes in order to reach the people. Once that freezer is full. Now it's my job to prepare and execute and cook, if you will. And so you know, her jobs, keep the freezer phobe My job is to keep that moving and everybody happy. It's an interesting development in a business, when everyone can stay in their lane. Everyone can do what they excel at, you know, you, you hear a lot of people refer to it as their zone of genius. So, you know, for me, Liberty is doing the pieces that she loves. Basically, when it gets out of the point where she's like, Oh, this isn't really the part I absolutely love, it goes to me, and then I get to do the part I absolutely love, the end result is a better experience for the client. When you have complementary skills, it allows for everyone and the business to benefit. If I go back to my original business partnership, you know, I spent a decade working in a group of technical trades, construction companies. And when I you know, when the business started at the beginning, so you know, over a decade ago, at this point, it was a very small office. And then we got five people and all, the president at the time worked in an office, really the size of a closet, I remember that being a big complaint of is yet no window. You know, it was a startup. And there were lots of bumps along the way, and everybody really grew. And so as the business grew over time, I ended up with some ownership in the business, there were three business partners. And so we had this really powerful triangle. And for so long, it worked really well. And if I really break down what, what brought that strength out it is those complementary skills. So we had one person who was, you know, in charge of the vision and the leadership, he really had that more charismatic CEO role. And in the end, he led the business through both developing the vision, and, and really just pushing, you know, the right direction. As a CEO, he was involved in so many different pieces. But if you really break down what that core role was, he was the visionary and the leader. And, then we had one business partner who was all sales, he had the relationships with the client, and really aided in kind of growing the service offering. He was the face to the client. And my role was the accounting finance tech piece. So, you know, both of my business partners had some amazing, crazy big ideas.

And ultimately, it was my job to make them happen. To lay out the plans and to execute on that. So when you look at that this relationship was so strong because we had all of these different skills, very complementary to each other. But I would say that one of the downfalls of a business relationship that goes on for so long, ultimately, we weren't all friends when we started. It was business that brought us together. But when you are growing, it's almost like if you think of like date as starting a dating relationship early on in life and then saying, oh, people outgrow each other people grow and so whether it be You know, a spouse, or a business partner, people ultimately can grow together, or people can grow apart. And one of the complexities of business partnership is when you join a partnership, in a phase of life that you are really growing. Same thing can happen, you can grow together or you can grow apart. And so our business relationship grew apart. And it was loyalty, really, and drive and desire for the business to succeed. That kept us coming back for more, I think we knew for a lot longer than any of us let on that it was the business relationship that was really no longer serving the bigger picture. But, you know, it is often a piece and that would be one of the downsides to business partnership is that sometimes, you know, leaving a business partnership can be very difficult for the business, the staff, all of these different, there's so many moving pieces in a business. And so, you know, we really did try to see it through for a lot longer. And could we have continued doing that, I'm sure. But at one point, you know, you decide that as you're growing that, you know, I want to make a change, I want to do something different. And it can be, you know, an obviously uncomfortable, difficult conversation to go to a business partner and say, hey, I want to move on with a business partner. He's, you know, and some will Woodside in this comment. But your ability to discuss and have difficult conversations, go through difficult times with a business partner is very similar to having an additional spouse, you must communicate on a level and get through complex situations. You know, if you think about a relationship with a partner, like a romantic partner, you talk about well, often family dynamics are a point of frustration or disagreement.

Money is another point of frustration, disagreement in relationships. And it's no different. When it comes to a business partnership, you have different people with different salaries, different work ethics, and different skill sets. You know, as much as a relationship may grow together, or grow apart, ultimately, everyone you know, professional grow, also grows at different paces, you'll really see in a business when it's growing quickly, not just in your business partnership, but across your team. Some people will grow at the same or faster paced than the business.

Every time the business rises to a new level, you will have some people that will continue to be rock stars, they will be there, they will have learned, they will have put in the extra effort to really continue to grow at that same pace. And you will have other people that as much as they have tried, as much as they have grown, they've just not grown enough. To be honest, these are some of the most difficult conversations I have ever had in my business career are the ones where someone is trying their best. This is not, you know, a lack of effort. It's not a lack of dedication or whatnot, they just haven't grown at the same pace as the business and unfortunately, in their current role they have been outgrown.

Those are the conversations I dread in terms of an employee leaving or you know, a restructure where it's not that someone's not trying their best. It's this unfortunate piece where sometimes your best just isn't enough. And that is a terrible conversation to have. Obviously not within so many words. You know, there's definitely a more eloquent way of delivering that information and, and hopefully doing so in a way that inspires and motivates someone to continue growing and continue to seek opportunity. But to focus back on the business partnership, you know, I look and say every partnership I have been a part of has seen great success that has always been in complementary skills. You know, I started this episode talking about I was in a Facebook group, and someone was asking a question about their business so they have a business. They enjoy working in The field, they enjoy the customer relationship peaks. They like the business. But as their business has grown, the organization, the systems process, accounting, all of these pieces, digital marketing are things that are not happening. Because those are not that person's back to that word zone of genius. So now you have this business that is realistically suffering, the business is not yet large enough that he really needs to bring on a team at its current size.

So at that point, that person has only a few options. Number one, you can ship that business back to be slightly smaller, where it's more manageable. You know, it's the age old question, do you want to sell a million dollars at 20%? Profit? Or do you want to sell half a million dollars at 40%? Profit? Well, smaller business, less stress, less risk. So often, you can be more profitable, when your business starts to grow. And you have to add in all of these additional people and resources, they eat into the profit. And so there comes this push, so your business is small and profitable. And then your business grows, and you must invest in infrastructure, technology, people, all these different things, and the business is less profitable. However, the next piece is the business that needs to maximize those resources and grow again. So it grows, and then the infrastructure grows and becomes less profitable. But then as the efficiency increases, and we utilize those resources, people equipment, well, now the business grows again, and now becomes more profitable. But a lot of times, the business doesn't do that last push to grow again.

So if you stay in this middle section, you just end up with a bigger, less profitable business with more stress and more headache, that efficiency piece, utilizing the appropriate resources, maximizing the output based on all of the fixed and variable expenses. That is where the real magic happens. So, you know, there were a lot of different people giving this Facebook group some different ideas. You know, he's like, I don't know, if I should shut my business down. I don't know if I should just keep going and keep trying. But he was giving some sales numbers and saying, you know, his sales were about half of what they were last year. But he had basically dropped a huge amount of expenses in order to keep running. So you know, he had equipment that was no longer being serviced. That was a problem. He was running out of cash because he wasn't getting its invoicing done. And it had been so long that he felt bad sending invoices. That's a tough one. I've heard that lots of times, you know, we've in a business consulting role, I've gone in and looked and there are still many invoices that have never been sent.

So if there's, you know, there's a few things in a business that must keep going, no matter what, and invoicing is one of them, because Invoicing is what brings the cash, especially if you have terms. So if you delay sending your invoice, and then your person gets 1430 days to pay that invoice, or suddenly, you know, you could not be seeing this money for a service you did six weeks ago. And so, you know, one of these pieces, we must keep the invoices going and we must keep the payroll going. If you have a team, you absolutely must get them paid. Everything else, you know, must be done. But less critically, the invoicing, the payroll and of course your government remittance type things. There's even a little more wiggle room in the remittances than in the payroll and the invoicing. So, you know, in terms of that triage, prioritizing, we talked about on show, invoicing payroll. So back to our example. We have this business and you know, I'm looking in reviewing his question and noticing, you know, he has very specific skills, but he has no one in his business that excels at the accounting organization. He has no systems, he has no processes. He's just winging it. And so, you know, there were a lot of suggestions from a lot of great people. But one of my suggestions was, have you ever considered a business partner? Because a business partner who now has some stake in the business will often come in for that ownership share in the business instead of a upfront cash you know, If your business is not doing very well, sometimes you don't have that from cash, you can't just say, you know, Oh, I'd love to bring in, you know, this person, this ops manager, because you just, you just can't afford them at that moment.

So, you know, you could potentially bring in a business partner, who for ownership stake in your business will invest for a certain length of time or whatever to bring the business back up to where you could potentially afford to hire them. Or they could have a salary or all of these so many different pieces, so many different options, really. You know, and I had a couple of questions, people reached out to me, based on my advice, and, you know, they said, Well, what is what is typical? And it really depends on the business depending on the value of the business, if you have no, if there's no value to your business, then you know, someone working for a percentage of ownership of that business may not be the best. But something along the lines of bringing in a partner, under whatever circumstances and negotiations work best can be a viable option. You know, we look at the good and the bad of business partnerships, and, and ultimately, there is no right or wrong answer. I think it's very human dependent. You know, you, you partner with someone, and they are going to go through, you know, good points in their life, rough points in their life, as much as we don't want our personal life to affect our business. It will always affect in some capacity, and a business partner, you know, we talked about how a business partner is almost like spouse, in how closely you must work together, it's, that person is going through with you, when someone runs into, you know, that feeling of just that feeling of just lack of motivation, it's your business partner that's gonna work through that with you, they might need to pick up a little extra time. And then when the roles are reversed, then someone else might have to pick up a little bit here or there, someone's away, someone has an illness. Having a business partner means that you have someone to help out when you need it, you have a person to talk through things with, you have a person to talk to, through, you know, those rough points of business. But on the flip side, you also have someone that in those rough points of business, maybe you don't see eye to eye, maybe one person wants to go all in and one person wants to pull back. And that is, you know that the downside is that everybody is on their own personal and professional journey. And, and how that affects your business partnership can go a number of different directions. So my you know, advice, in terms of tangible tips that you can implement into your own business is to decide if your business would benefit from having a counterpart, having someone that has that opposite skill set, but that still has some skin in the game still has the desire for the business to grow and be successful, it's very different than having an employee, when someone wants the business to win as much as you want the business to win. You know, ownership doesn't have to be 5050. You know, I would really recommend discussing with your lawyer in terms of exactly what you're trying to accomplish with your ownership, layout and structure.

It's important to document everything to know you know, the tax, the tax ramifications and effects of your business partnership. And make sure that things are done in a way that will serve you and your partner later. It's important to have the necessary documentation should anything go wrong. You know, and so to look at a What's your business benefit from this person, a person you don't necessarily have to have a person in mind you just need to know if your business could potentially benefit from this. And then kind of start to think about where that person would potentially come from and what they are going to want out of the relationship from there. It's a matter of just keeping your eyes open. You never know when that business partner might surface, you know, and in my example of being a media company, this is someone who I met online.

I was in her Facebook community. I took some courses with her. She does selfie coaching, brand coaching, personal brand type stuff. So when I left the corporate space I helped Fold. She and I are so different. And so, you know, at that time, what if someone had said you're gonna fly across, you know, the continent to spend a weekend with her and you're going to be working on a business project? I would have said, Absolutely not. So you never truly know. But I think it always just comes back to treating people with respect and having that mutual respect for each other's different skill sets and giving them the benefit of the doubt. You know, going in with the mindset that people want the win for the business, and ultimately rooting your entire partnership in your objectives always comes back to those objectives. If your business partner can align on the business objectives, then we can set out whose responsibility is what. And don't micromanage each other. Give each other the benefit of the doubt, know that, you know, the end objective is what you're both working towards the two most common partnership issues. Number one, you don't, you don't align on the objective, one person is working towards one thing and the other person is working towards something else. Problem. Option number two, or issue, issue number two people are growing. And realistically, you just grow in a different direction.

At that point, you must, you know, really lean on communication to navigate through a tough situation. Well, guys, that's all we have for today talking about business partnerships, the good, the bad and ugly. I hope that you will join me to continue the conversation in the service based business society Facebook community. We can talk more about business partnerships. If you have any questions, I'd love to connect with you there. And until next week.

Well, we are all out of time for today. If you guys have not joined the service based business society Facebook community, make sure you head on over to Facebook and we can continue the conversation. Be sure to also follow the show by going to any podcast app and searching surface based business society. Click subscribe, click the fifth star and leave us a written review. Have a great week and we will see you soon