Many Progressive community members are forming partnerships/JV’s. The glass is half full, and success stories are many.
But joint venture partnerships break and fail too. The polar downside of partnerships being, you have to give away half. And if you had (the) money you wouldn’t need partnerships.
And they can be messy/time consuming when they split. These are all of course true. No one should go into a partnership (operational or legal sense) without eyes wide open and good understanding of the ‘trade off’ (also known as downside) of partnerships.
That’s no reason not to get married, though. There are also many upsides that might not be fully clear. I’ve had a huge positive in a single partnership with Mark Homer that has resulted in outcomes I’d never have achieved on my own, but also some partnerships that have broken away.
I hope the following comments/experience help you when looking into partnerships to see both/all sides, and not just the one side you see currently.
Joint Ventures that failed/were difficult/ineffective (and why)
1. 3 in a bed
We have had 2 business partnerships break (operationally messy at first but reconciled later, with no creditors lost out/involved) because there were 3 of us, and the third always felt excluded (Mark and I were two of the three)
2. JV Partners too similar
On 2 occasions the partners, or at least 2 of them, we’re so similar that it caused overlap, duplication and conflict in the end (despite good personal relationship). If two of you do the same thing, one isn’t needed
3. Friends for a long time, then went into a Joint Venture partnership
This was a surprise, but what we thought we knew about this partner, we didn’t until we went into business. Mark and I were not lifelong friends before our partnerships, we met in the business
4. Different expectations
One partner had a very short term view whereas Mark and I have a vision of decades and will make longer term decisions. This can cause some strategic friction
5. Free ride/not really a true business person/investor
Some people t h i n k they want a real business, to be a true investor/business owner, but in reality can’t/don’t step up to the added responsibility
6. Jumping in before HoT/contract drawn up (or taking way too long to draw up the agreement)
If you already have kids when discussing marriage it changes things. One partnership we were so far in the operations of the partnership (almost a year) and still negotiating/dragging out/avoiding the finer details of the contract, it caused friction
7. Getting into bed too early
Once or twice we’ve made things legal/contractual too early instead of having an incubation period. No need to rush this (unless of course you’re lending money/partnerships buying property where you want to ‘Rush’ the 1st charge)!
Joint Venture’s that succeeded (and why)
1. The partnership with Mark and I is 9 years in and stronger than ever I believe because:
a. Totally different skill set
He loves what I hate. He hates what I love. Virtually zero duplication of roles and responsibilities therefore little duplication/wasted time/getting in each others’ way. (this was an accident but can be reverse engineered and copied)
b. Very similar long term vision
A different skill set but totally different vision will only work for a very short time. That may be OK for people who like short term JV’s such as flips, but not for us.
c. We continually learn from each other
We push each other’s buttons so get stretched constantly but see the upside benefit in being challenged in this way to create progress and momentum.
2. Clarity of agreement, roles, shares and responsibilities
This wasn’t done right away but was done early and very clear with no blurred lines.
3. Let each other crack on
We (mostly) stopped micro managing each other in 2007 (unless it’s buying cars in which case we argue)
4. He had (a few deposits worth of) money and experience
I had time & hunger. Back in ’05/’06 when we started without him it’d have taken me 5 years at least to save a deposit. Without me Mark May still have been employed/taking too few ‘risks’ and had slower momentum. For the partner with little/no start up capital you significantly fast track your results. N/A if you have loads of cash already (though many other benefits still apply), but I didn’t then
5. Added accountability
In the early years and still to this day I wanted to prove I had value to Mark. That kept the midnight oil burning when required and kept me focused on the vision, not chopping/changing every 14 minutes or getting distracted and like having a personal trainer committed me to step up to a higher level and not let myself off the hook. We dragged each other up and along.
6. Mark had a Lord Sugar-esque black book/contacts list
That I got introduced into that would have taken years or maybe never happened.
7. Multiple streams of income
The varied skill sets enabled us to set up additional income streams in Lettings, bridging, commercial ventures, training businesses and more that alone we wouldn’t/couldn’t have done.
8. Bigger property deals you can’t reach alone
If a partner helps you step up to the next level of deal you can’t/couldn’t do alone (without huge risks) then you go up the food chain faster and sharing half of a deal 3 times as big (and now being in a much bigger league) has many upside benefits.
9. Additional friendships we’d never have formed
10. Continual learning & growth that we both love
11. Accelerated brand awareness
More deals, more cashflow, more notoriety and therefore more compounded opportunities present themselves to you.
We have one joint venture partnership that has lasted 7 years where we dip in and out of working with each other on frequent short term deals (6 months to one year, one of launches or events) and that works because that is the way our partner works best.
Perhaps many people see the term ‘JV’ as a rigid structure (your money, my time/deal/management).
Any member of your team can be a joint venture partner (legally structured, hand-shaken, employed, contracted, inspired).
A collaborative mindset rather than an isolated mindset creates enterprise, growth & economy.
Best of luck with your property joint ventures and partnerships, great to see so many successful partnerships in the Progressive community, I’m happy to answer any Q’s you may have.