Why do Some Partnerships Fail?
In the mid 1980’s, when I was a kid growing up, my dad had an electrical contracting business. He also collected a few rentals. All of this was done between 4 partners. For a little while, things were good. We moved to a bigger house in a better school system. Christmas one year was overflowing for us 4 siblings. In the early to mid 1990’s the business failed, the rental houses were gone and times got tough.
Observing my dad’s actions & thoughts through the next 20 years allowed me to form an effective approach & mindset around partnerships. I’ve developed 3 rules which I bring to every partnership and in return, ask my partners to bring the same:
- Produce MORE than Your Share – My goal is to bring more to the table than my partner is bringing. And when she does the same, we are always both satisfied, or maybe even a little bit in each other’s debt. It is almost a healthy & fun competition where the partnership gets better over time as a result.
- Know & Grow Your Value to the Partnership – When I came to real estate broke & nearly bankrupt, I noticed that people would take my calls if I had a deal on the table to discuss. If I just called with ideas-asking about their buy box-trying to schedule a lunch to simply waste their time-the calls stopped answering. The lesson? DAN BRESLIN Would be THE BIGGEST SOURCE of profitable real estate deals in the world. This was the VALUE I recognized and still operate on today.
- Good Partnerships Create Aligned Interests. When you & your partners interests are aligned, everyone feels properly incentivized to bring their best effort & generate the highest results. At Diamond Equity there is no “commission cap” because everyone in a Deal Making Role is paid a percentage. Doesn’t matter whether the deal nets a profit of $20,000 – $200,000 – or even $500,000 or more. The percentages remain the same.
Often, I see new investors form partnerships without understanding these rules going in. Two inexperienced people partner to go figure out the business. Often, one of those partners pours much more into the business than the other and eventually they go their separate ways.
Here’s how you setup your partnership to win:
- Know the Value that you bring to the table
- Define the Value that you expect your partner(s) to bring to the table
- Align the profit share according to those values each is bringing
Once this is setup, everyone then does their best to outperform their original value. Assuming you’ve chosen a good business idea and the market agrees, this effort & value compounds over time to produce that income you set out for in the beginning.
This is how we operate here at Diamond Equity. We are all striving to deliver more than anyone is expecting. We’ve been blessed as a result – now operating since 2006 & now have more than 25 Acquisition Managers throughout the country buying & selling houses, commercial & industrial property, & land.
The Type of Business We Buy
We are interested in buying a business with $2-$5 million in net profit per year. The ideal business already has a management team and sales team/sales system in place. Most importantly, this business would be able to grow with additional high quality lead generation-which is our value-add. If you know of a business like this which might be available for sale, please email me the details.