Doing Life with Business Partners

Relationships are hard. 

Make them legal and they can be harder.  They can make or break a business. 

Business partnerships are a lot like marriages, legally and emotionally. 

What can you do to be better prepared for them?

Episode 101 of the Live it Full podcast discusses this! You don't want to miss it. 

www.liveitfull.com

Transcript

Richard (00:01.586)
Hey, welcome. You're listening to the living full podcast. I'm Richard, your host. If you haven't listened to the podcast before we talk about faith, family finance, fitness, we talk about working hard, we talk about being entrepreneurs, talk about being small, business owners, parents, we talk about it all. It's our life. We share it.

Richard (00:19.742)
If you've listened to the podcast and you love us and you haven't left us a five star review, please go do it on Apple. I ask every episode it's a call to action. Go leave us a five star review falls on social media to go share something. Help us continue to spread out the message to live it full amongst the universe, but Hey, I wanted to talk today about business partnerships. It's something that came up. Um, it seems like it's a theme in the past couple of weeks that I've been hearing from people and from.

Richard (00:49.674)
other podcasts and those kinds of things. So I think it's a good time to talk about it. I don't, you know, it's one of those things that, um, we mentioned business partners a lot on the show. Um, we talked about the relationships we have. I've had Matt Adkins, who I do some, some life and business with on the show, a CEO reboot when we did the bootcamp for business owners, um, did like a 12 week deal.

Richard (01:11.730)
It had Matt on here. We talked a lot about business and life, but I was listening to an episode of the real business owners podcast. I don't listen to a ton of podcasts. Not because I don't want to, but simply because I try to produce more than I consume. Now I think there's a heavy, healthy level of learning. And so my deal is if it's not about earning or learning, I probably don't put much emphasis on it as a podcast or as, as social media. I try to produce more than I consume.

Richard (01:42.362)
because I think that that's the, the success matrix kind of thing. When you look at it, like the people who do well in life produce more than they consume, whether it's just anything, you know, money probably would be a big one. You got to make more than you spend. Um, that was one of the things my mentor told me a long time ago. It's not what you make. It's how much you keep that you can keep moving. And so I want to talk about business partners though.

Because I think that it's an area that people struggle with. I think it's an area that can break businesses, but I also think it's a thing that can take businesses to other levels that you might not able to be able to do by yourself. So I was listening to an episode of real business owners. It's one of my favorite podcasts. When I, when I get to listen to it, I know the, uh, the podcasters and business owners, uh, Trevor and kale.

Richard (02:36.934)
And they had my buddy Matt speaking of on the show and he was talking about business partners and it came up there And it made me think about it and I had posted on Facebook. Don't do life Don't do business with people that you wouldn't do life with Matt got into a bad partnership once with people who just didn't want to work as hard as him And so I want to talk about some of that. That's kind of what spurred it I'm not gonna go into details on his deal because I can bring him on the show and have him do it soon

And he can talk about it. Um, but I think that in, in all business partnerships, the first thing, and I think it's the same with any relationship is the number one thing we got to focus on is communication. Every situation I've ever had in a business partnership that went poorly or was misconstrued or that there was animosity or anger or

any sort of malice towards each other was because of miscommunication. And so I have been blessed in life to have, maybe it's not blessed, but been very fortunate to have put myself in situations with people that I'm willing to do life with in business and life. Because I think that if you're not willing

to go have a drink and dinner with your business partner on Friday night and talk about business because you don't really like them that much, then you're not kind of do well. And I know there's going to be some of y'all that hit me up in messages saying, Oh, I don't like my business partner, but we work great together. Good. Good for you. I think that there are exceptions. I think that they're not the rule. And so that's my take anyways. I think that to have successful business partnerships, communication is the number one thing and just having a set

Richard (04:24.050)
agreement on things. So in our real estate business, there are, for those of you that may have listened, may not know, um, it's my wife and I and another couple, we all have pretty defined roles in what we do in that business. Um, some of us are more into sales or remodeling or decorating or the financial side of things. Um, but we all have a defined role in there and there's going to be give and take and there's gonna be times when one of us puts in more work than another, but at the end of the day, I know it, it levels out pretty well and that

the, the, the ability for us to do things together outweighs any of the complications of it because we can do more, we have more credit worthiness. We have more capital, we have more cashflow, we have more ideas coming in. And so those partnerships work well, but you have to be willing to compromise or make sacrifices or just flat out make decisions.

Richard (05:22.626)
that you're all good with, at least in my opinion. And so we have a rule in that partnership that if it's not a unanimous decision, we don't do it. And so simply, there's probably been deals that two of us have wanted to do, and it's not ever husband and wife that agree on it, which is the funny dynamic.

Richard (05:46.446)
There's probably been deals that we've missed that looking back, we should have done, but one of us or two of us said, no, like, I don't like this. I don't like this deal. Here's my concern. And so instead of fighting about it, I mean, we'll discuss it, but if one of us is just a hard, no, we don't do it. Why? Because I don't want any animosity over something I'd rather pass on a deal. Then damage a business relationship. And so I think business relationships, they are a lot like marriage. I joke around with one of my business partners. I'm like, man, you.

Richard (06:16.626)
It would cost you a lot to divorce me at this point. We got joint checking accounts, got a lot of joint assets. Like it would be a mess. And so just like a marriage, you got to work on stuff. You got to talk to each other. You got to, you got to have some fun too. And so I think number one though is it's clear communication. If you're upset about something, talk about it. If you're on the fence about something, don't feel pressured to do it just because your partner does, because it's better to have

conversations on that. And so I think that that's a huge deal. Communication. Number two, I said it, but don't do business with people you don't want to do life with. I'm serious. They may be really good at what they do, but if you don't like them, or you don't have the same values, or the same core values, or the same...

Richard (07:10.778)
ideas about how to do life. Like it would be hard for me to do business with somebody who doesn't believe that faith comes first.

Richard (07:18.550)
And I don't just mean business partners. So there are, there's, I think there's a couple of different kinds of partnerships. And so that's where I want to go. Like next is you have obviously your business partners that you may have equity in ownership with my real estate. I'm a 25% owner. My wife's 25% and so forth. We have equity together. We own, we have common ownership, but we also, when you're picking people that you're going to do business with,

Richard (07:48.670)
It is just as important to think about the same things. So when picking somebody like a property manager or a general contractor or a roofer or an insurance partner, do their values.

Richard (08:04.978)
align with yours? Do they effectively communicate?

Richard (08:13.526)
Because if they don't, you're destined for issues, especially as you grow your business and you scale it and things start going differently where you're not running everything yourself. When you hire that manager or that CEO to take over what you have outgrown as a person, you were the visionary, but you can't, you got a company so far, but you can't take it any further. You have to

Those business relationships you make with business partners, contractors, I mean, it's so important that they share the same core values as you do. The horror stories I've heard from business partnerships that have gone south through embezzlement, through greed, through any of those things started with they didn't have the same core values.

Richard (09:13.358)
I assume my business partners aren't going to steal from me. Maybe I should be better about diligence on it, but I know their values. Not going to happen. And I'm not going to do business with business partners in it that I can't trust because their values are different than mine.

Richard (09:37.034)
And so I was reading some quotes on business partnerships.

Richard (09:44.190)
And I read one from Warren Buffett that said, partnership is not a legal contract between two equal individuals. It's an emotional alliance between two people who are committed to each other's success.

Richard (09:56.710)
So there's two components to that. Business partnerships aren't just the legal contract, but what I would also tell you is I don't care how much you do trust them, how much your values align. You do need legal documents in place. I want to marry my wife 15 years ago. I gotta go to the courthouse and get a legal document, right? Like it's, there's things that you have to do. Make sure that you're doing things as you grow with partners.

Richard (10:26.454)
with legal documentation behind it.

Richard (10:30.478)
I've seen too many businesses fall apart because of that. I've seen a lot of businesses fall apart because one felt for years they were doing more work and needed more equity in it and didn't have it because they didn't have the legal things in place. Right? And so, but most of that probably stems from miscommunication and them not stepping up and saying, Hey, I'm doing X, Y, and Z. I should be compensated for it.

Maybe that's a paid position versus I'm just an owner and I take a draw annually or quarterly or whatever it is. And I get a dividend. Well, maybe because I have a more active role in the business. I need to be paid a salary. But if you don't have those conversations, what happens is bitterness, anger, resentment start to creep in. So you got to talk about them. But so there are, you have to have those legal contracts. You have to have attorneys do things. You have to have them done. Correctly.

Richard (11:27.286)
You would be shocked by how many businesses don't have their entity set up correctly or any operating agreements or bylaws. I mean, I'm in a simple partnership on real estate with a partner, but like our bylaws for it, we have to have an annual shareholder meeting. Which we do. And we talk about business and we do that a lot, but we have to annually because that's what it says. But partnerships, not a legal contract.

not just legal contract between two individuals, it's emotional lives between two people who have committed to each other's success. You've got to want your business partners to win. And I'm not talking about just the ones you have equity with. I'm talking about your property manager, your insurance person, your diesel mechanic, the people that you choose to let into your life that you may pay a salary to, you may pay a contract rate to, that you write checks to.

Richard (12:18.742)
better hope they win. I have seen too many people who are afraid of other people's success.

Richard (12:29.174)
because they think there's not enough. And that's a scarcity mindset. We've talked about that a lot. I believe in abundance. I believe in an infinite creator. Hell, they print more dollars every day. Yeah. They're worth a little bit less, but there's a lot more of them out there for you to grab.

Richard (12:46.562)
but you gotta want other people to win. I want my property manager to say, hey Rich, I can't handle any more of y'all's stuff without an employee. Good, hire one. We'll keep you going. I want them to win. I want them to grow with us. I want my banker to grow with us. I want my kids to understand that, and to understand that the

people you surround yourself with in life and business need to win with you. You need to elevate them when you can and vice versa. I want you to win. That being said, I was talking to a good friend about this this week. I've had two encounters in the last month with people who

Richard (13:41.146)
Probably don't even remember it, but they hosed me on something in the last decade. Maybe they do remember it.

Richard (13:51.426)
They were short-sighted in what they did. They didn't look at the long-term implications of how that impacted our relationship. I like them, they're decent human beings, I think. And maybe they're doing really good things now and they were going through a rough patch, but I'm not gonna forget it. I forgive them. I don't hold any animosity, no grudges.

Richard (14:21.182)
I want them to be successful. And so I think about the quote, I want them to eat, just not at my table. So there's been a couple people who have successful businesses that I have encountered in the last couple months who probably during a harder time did not communicate effectively effectively with me. And I probably won't ever do business with them again. Like I said, I want them to eat. I wish them well. I hope their businesses thrive.

Richard (14:51.074)
they're just not going to be a part of mine. And that's okay. You have to learn that. You have to learn that that's okay. And not to let that bother you. That's the reality of life.

Richard (15:07.158)
I've heard don't go into business with your friends and I would say that's true, but I think it's hard to, it's hard to quantify what is a friend. I keep my circle tight. We talk about it. Why? Because I don't like drama. I crave peace. I crave.

Richard (15:25.498)
I crave freedom. I don't want to be entrapped in other people's drama. So I keep my circle tight. I have a lot of acquaintances.

Richard (15:36.126)
I think there's a difference. If I'm doing life with you, probably can do business with you. If you're an acquaintance and I'm not, yeah, I think that's probably harder. I think that's where people think, Oh, I can do this. We've got a great friendship. We've got, you know, I talked to them, you know, once a month and they think that they can do it together, but you don't really know their core values. You don't really know what they're about. Businesses like that, I think can, can be a struggle.

Richard (16:04.442)
I had read that John D Rockefeller had said a friendship founded on a business is better than a business founded on a friendship. I don't know that he's wrong. I struggled with that as I was reading it this week because it's, I think that you can do business. You can do life. You can do partnerships and have equity in a company with friends.

Richard (16:31.650)
but it's probably rare for people to start that way and stay friends. But I can tell you, I've had with this podcast, with Live It Full, with some of our other business ventures, strangers will support you more than those people you think are close to you.

Richard (16:52.870)
I need to say that again for the people in the back. You will have strangers on the internet who will support you more than the people you think are in your circle. Not everyone in your circle is in your corner. Remember that when you're talking about business partnerships and relationships. I want you to win. Why? Because I want to win. And I think that everyone can.

Richard (17:22.818)
not everybody thinks that way. There will be people who see your success as a threat, and instead of wishing abundance upon you, they wish scarcity, and what happens is it turns around on them because they aren't thinking about what we can win. They're thinking about what can you lose. If you're thinking about business partnerships, go into it with an open mind. I think they work. I think they cannot work.

I think it really comes down to the individual and knowing your boundaries, knowing your limits, knowing what you are capable of and what you bring to the table and partnering with people who also bring value to the table. Last piece of advice I'll give you, you never go into a business partnership for money. Do not sell a stake in your company simply for money because you're going to be doing business with people.

who maybe they align with your values, maybe they don't. So if it's just a cash injection, I need money to make it work another year. Think long and hard about how you do that because not all silent money is sunny. Silent, not all silent partnerships are going to come in and be silent. Very few actually will. Money comes with conditions. And so if your core values, if your ethics, if

The way you do things does not align with the people who brought in the money. You're going to get host almost guaranteed. I've seen it a couple of times. There are other ways to get capital aside, selling equity. Anyways, my take is partnerships are great. They can be amazing. I have had some awesome ones and I wouldn't be where I am without them, but I don't just consider. So wrapping it up, I don't just consider the ones that I have equity with in a business to be business partners. I consider my

Richard (19:21.310)
Some of my customers, I consider my property manager, my banker, like we're all partners in this and I want them to win. So you know what we do? We all send referrals to each other. We take care of each other. I want my florists to win. I want my, you know, I mean, seriously, the better people do at business, my realtors, my tenants, like the better people do at life, the more I will win. Maybe that's selfish, but I want people to win.

Richard (19:52.766)
And so I'm going to surround myself with number one winners and number two, people who share the same values, who have the same ethics, who believe in faith, family, finance, fitness, and I'm going to help them win because like Zig Ziglar said, if you help enough people, what get what they want out of life, you'll get what you want. And I truly believe that. I think this was episode one on one of the podcast. Thank you, Caitlin. And I love you.

She's going to be back in the studio someday. Maybe we'll call it season two, but I hope you continue to live it full. I hope you create, create great relationships, great business partnerships, and I hope you win.