Why Most Partnerships Don’t Work, and the Few that Do

Question

Most partnerships DON’T work because the partners go into the partnership for the WRONG reasons.  Partnering between two people both with no or limited experience; both with no or limited capital, or because they’re “good friends” and want an adventure together, will ultimately result not only in the failure of the partnership, but often in long term bitter feeling of blame and hostility between the ex partners.

The partnerships that are successfully, both financially and socially, have most of these characteristics

1- the  parties bring complimentary attributes to the partnership

2- the parties are of a like mind concerning ethics

3- the parties view risk - return the same way

4- the parties goals are aligned

5- the parties RESPECT one another

6- the parties are willing to defer to the other partner in that partner’s area of expertise

7- neither party is under undo financial pressure

8- each partner’s “significant other” is supportive of the partnership

9- the partners have an agreed plan in case of death or incapacity of one partner

10 - the partners have a legal, executed buyout plan in case one or both parties want to terminate the partnership

If you’re considering going into a real estate, or any business partnership, you may want to consider the above and take a hard look at the chances of success. The “high” felt by the excitement of beginning a new business adventure lasts only a limited amount of time. The reality of failed deals, broken pipes, deadbeat tenants, and loan turndowns (also know as REALITY) very quickly bring the partners back into the realization that investing for profit is hard work

Joe Villeneuve · Answer

There are three reasons, and ONLY three reasons to form a partnership.  If your partnership isn't formed because of the following three reasons, it will fail.

1 - Your partner must be able to do something you "can't do".

2 - Your partner must be able to do something you "don't want to do".  If you don't want to do something, you won't do it well, so have someone else do it.

3 - Your partner does something you "shouldn't do".  Just because you can do something, doesn't mean you should.

Dave Kush · Answer

This reminded me of one of my favorite quotes about partnerships.

"if going into business with a friend, always have a written agreement, because by the time you need it, you won't be on speaking terms anymore."

I have done some very limited investing with friends-family, but they met the good criteria you listed, and that's why they worked out the way they should.

Thanks for this post. Gave me a chance to run through my current and past relationships to make sure they are on track.

Scott Mac · Answer

Understand yourself- - understand the other person.

Do you care if you are comfortable in the partnership with the other person, or is it just a numbers game you'll partner with anyone no matter what to make your numbers.

For instance, if you are a hard drinking man, partnering with another man who drinks as much as you do, maybe even the same brand, might workout better [be easier to work with and make you feel more comfortable along the way] then a tea totaling person.

Maybe look for someone who shares your background. Such as, if you like to spend time at Nascar events and the other person looks down on people who spends time at Nascar events- that might not be a very good long term fit to feel comfortable with.

So what I am saying is, for some people the interpersonal aspect of who the potential partner is, may have some bearing on the comfort and satisfaction you get in doing business with this person.

Which is not discussed very much, but for some people could be important.

And be careful not to partner with grifters, thieves, or the very self centered.

Just my two cents.

Kelly O'Keefe · Answer

@Don Konipol I'm a little late to this party, but great post. Thank you!

Scott Mac · Answer

Another thing to think about is how well your personality gets along with the other person's personality.

Some say there are seven basic male personalities and six basic female personalities.

Here are a couple of links:

Male:  https://www.youtube.com/watch?v=_X4MD6SJndM

Female:  https://www.youtube.com/watch?v=5kF2L1IjFTc

Jim K. · Answer

Going a bit off-topic here, but I hope not much.Since I am in this business with my wife (although I do all of the talking here on BP), I'd like to chime in and point out that we have seen a rather large number of married and unmarried couples in this business together crash and burn because they didn't wrap their heads around points like these before going into business together.It's not going to work if you go into this together just because you're both close to broke and both just want a bit more money in your lives to make your life a bit more fun. You need a much more solid foundation to build on.

Shafi Noss · Answer

1- the  parties bring complimentary attributes to the partnership

2- the parties are of a like mind concerning ethics

3- the parties view risk - return the same way

4- the parties goals are aligned

5- the parties RESPECT one another

These sound great I love parties, let me know on the next one I'm not too far from the Woodlands.

Why Most Partnerships Don’t Work, and the Few that Do

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