Mike Simmons is an important part of our 7 Figure Flipping team. He also has been a part of a successful business partnership for many years now. However, it wasn’t his first or even his second or third partnership. Through the failures of his earlier business partnerships and the success of his current one, Mike has identified the benefits of partnership, the requirements a potential partner must meet, and insights on what it takes to be a part of an exponentially successful duo. We’re going to lay it all out for you here.
If you are thinking about taking on a partner the first question to ask yourself is…
Why partner at all? Why bother?
This is a moment in which you need to be brutally honest with yourself. Do you want someone to talk to, to bounce ideas off of and celebrate the wins with? We understand if it is, because entrepreneurship can be lonely. Having a partner is having someone who is in the trenches with you, but that alone is not a good enough reason to get a partner. It’s expensive to take on a partner when you want a buddy. We are talking about splitting all your profit and control of your business right down the middle.
That being said, there are undoubtedly benefits to having a good partner.
3 Benefits to Partnership:
Benefit #1 Have a True Sounding Board
If it’s the right fit you have someone who is on board, understands the vision, and problem solves with you. That can make you feel less alone, but let’s be honest, you can also join a Mastermind to get support and feedback.
Benefit #2 Freedom to Take Time Off
With a partner you can go on vacation and you know someone who cares as much as you do about the business is making sure everything runs smoothly. Mind you, you are splitting profits 50/50, so there is a price to getting that time off.
Benefit #3 Exponential Increases in your Business Potential
In the right partnership you can exponentially increase your income which is why it becomes valuable. If you are merely doubling the profit of your business it isn’t worth it, because you are also giving half of it away. So why put up with all the potential liability of partnership? You want someone who does more than double your profit. You want a partner that through what you both bring to the business your profit becomes 4 or 5x more than it would be if you went at it alone. You don’t want a 1 + 1 = 2. You want a 1 + 1 = 8.
How do you find this Partner that Rockets your Business to Exponential Heights?
Mike Simmons came up with these requirements after 10-12 years of having partnerships that did not work and ultimately finding one that really does.
4 Requirements when Partnering:
- Identical Risk Tolerance. If the person you are partnering with doesn't match your risk levels, and what is scary to one of you is the starting point for the other, you are going to have conflict. Imagine someone pushing on the brake while the other is pushing on the gas, it just doesn’t work.
- Alignment of Goals. Make sure you have the same final destination in mind. If you don’t, somewhere around mid-journey you are going to start heading separate ways. From day one make sure you have the same end goal in mind.
- Common Hunger. If one person has the drive to work around the clock, burns the midnight oil etc, and the other partner turns their phone off at 5pm, takes weekends off and monthly vacations, the workload will quickly become imbalanced, resentment will build, and you will need to dissolve the business.
- Complementary Skill Sets. Don’t partner with someone just like you. Look for someone who is naturally good at areas that are challenging for you. An example of this is sales and interpersonal relationships. Mike talks about how he is more naturally an introvert who doesn’t enjoy sales calls. His partner is naturally extroverted and for him the sales and interpersonal relations are easy and seem effortless.
Here’s the deal…
When you are doing this awhile and start closing a lot of deals, people will approach you to partner and it will be tempting. The attention necessary to understand who you are partnering with is not unlike hiring someone. You have to be ruthlessly discerning.
Insights (lessons learned) About Partnering
1. Partnering is a LAST resort.
Most of the time when people feel like partnering what they actually need is to hire someone. There is something they are struggling to do themselves that isn’t an inherent strength and what they need is to hire someone to take on that job.
For example Mike originally hired his current partner to be his sales manager. Don’t partner with someone just because you need help, hire someone. You partner with someone when they bring something to the table that will make your business improve exponentially.
Before you jump into a partnership, work on a few projects with them and see how it goes. Partner with them first as collaborators not 50/50 business owners. People can say one thing when you are working together, but actions speak for themselves. Put the partnership through a healthy trial period. Take the time to see how they work.
2. Use Personality Assessments
Know your strengths and know your weaknesses. Mike Simmons uses personality and assessment tests to know his own strengths and to see how his potential partner compliments him based on those assessments. And if you are not a 100% match, you know you will have to hire someone to cover the weak spots you both have.
3. Have clearly defined roles.
You have to know where your responsibilities lie in the business and draw those lines clearly so when something goes wrong there is accountability and there isn’t confusion about who is in charge of what.
4. Review Roles and other aspects of the partnership at quarterly meetings
You have to look at what is and is not working in your job responsibilities. When you review it, you are consistently assessing to avoid resentment and improve on efficiency. This allows you to constantly adjust and improve. We recommend a quarterly review.
5. Create a Buy/Sell Agreement
A buy-sell agreement, also known as a buyout agreement, is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business or chooses to leave the business. This is not an agreement to make when one of you decides to leave what is now a 10 million dollar company.
Create this agreement when your business is smaller and revisit it once a year.
6. Join a Mastermind
You have a partner but widen your range of support together. Your business will profit from the additional influence of other entrepreneurs. It isn’t beneficial in any partnership to put the entire weight of your support needs on them. Create a community that benefits the you and your business and your partnership will flourish as well.
7. Trust your Gut
If your gut is saying don’t do it, listen. Have you ever noticed when something goes belly up there was a little voice inside of you that was saying ‘this just isn’t the right fit?’ Most people hear that voice and ignore it. Save yourself a great deal of time and money and trust your gut. It is never wrong.
We hope Mike Simmon’s Masterclass on partnerships will help you avoid unnecessary, unsuccessful partnerships and discern an exponentially profitable one!