4 Essentials In A Partnership
Is it possible to invest in real estate by yourself? The simple answer is yes. However, wouldn’t it be easier and better to partner or have someone you can delegate work to? Maybe.
I often see and hear of people getting into a partnership with their friends and family because they both want to get into real estate. There is nothing inherently wrong with going into business you know and like. In fact, those are who you should be going into business with. Who wouldn’t want to see the ones they care most about succeed and live a good life.
The problem with partnership is when things don’t go as planned and when you face setbacks. Can you communicate openly and freely as a partnership? Can you keep business as business and personal matters separate? We too often hear of friends or family going into business together to end up never speaking again because of a failed business venture.
When it comes to creating a successful partnership, there must be the following:
- 1. Open communication
- 2. Complementary skills
- 3. Clear division of responsibilities
- 4. Written legal documentation
1. Open Communication
This is essential in any relationship and not only in business. If you don’t communicate openly with your spouse or significant other, how long do you think this relationship will last? If you don’t feel like you can openly speak your mind, how can you face the true business issues and overcome them effectively?
Every person needs to be heard to succeed. Every person needs to feel they have a voice. It does not mean they have to have their way, but their opinion needs to be recognized and acknowledged.
Instead of telling someone what to do, explain the reason why it is being done this way. They may not like the decision but will more likely support it since they know the rationale behind the decision.
If you are a leader, keep your door truly open to hear from those you are leading. Take the time to empathize and commiserate with them. Help them see you as a person who cares. They are working your front line and often see the problems before you do.
2. Complimentary Skills
Before jumping into a partnership with others, you must ensure that each partner has skills that compliment one another. What you bring to the table should be strengths you already have that compliments your partner[s]. If one person is analytical then the other partner should have skills other than analytical ones.
It does not help a business if all the partners have the exact same strengths and skills. Who is going to take care of the other parts of the business?
3. Clear Division of Responsibilities
There is so much to do when starting a business that you should not have multiple people doing the same job. There should be clear lines drawn on who is responsible for each task. This does not mean others can’t pitch in to help with the task, but there should only be one person to oversee and make decisions on that task. This creates buy-in and a sense of responsibility in the partnership. If nobody was responsible for the task, either it won’t get done or everyone will have their own opinion on how it gets done. One person on each task is key to success.
4. Written Legal Documentation
This is my friend or family, why do I need a contract? No matter the relationship with your partner, you still must have a written agreement in place that spells out how the partnership will operate, ownership is split, and includes legal protections.
If your potential partner is unwilling to sign an agreement or put in the work for this, then this partnership can be put at serious legal risk and a prolonged battle should the partnership go south.
Before jumping into a partnership, ensure you and your potential partner(s) are compatible and bring something separate to the table. The above four points are essentials in order to be successful in a partnership but are not an exhaustive list of what is needed.
There are many benefits to having partners including the ability to scale by delegating tasks and responsibilities to others. It can bring huge benefits to you and your partner(s). Ensure you find the right partner(s) to work with and do not force yourself into a relationship out of desperation.
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