The first time I decided I wanted to do my business for myself, I remember I leapt into the challenge with absolutely no hesitation or nervousness. I saw a very good friend of mine thriving in his own business and every part of it excited me. I reached out to a very good friend of mine that had the same drive and ambition and very quickly we decided to partner up and go become titans of industry! I put in my resignation to my law firm 2 months ahead of my wedding. My wife, who has always been my biggest fan and support, agreed to my move without any hesitation and overnight we were on our way to wealth and fame.
This was nearly 20 years ago and the business we had decided to conquer was financial services and we were going to become financial advisors! As we did our research, the companies that kept coming up for us were insurance companies so that is who we met with. As we had those meetings, they told us everything we wanted to hear. Limitless income potential, doing well by doing good, educating people to buy what they need but they just didn’t know and about 20 other benefits of becoming financial services professionals. With all the energy and drive you could ever want with absolutely no knowledge or experience, we didn’t realize we had just been sold to and that if we wanted all those dreams, we needed to learn to sell fast!
As we started out conquering the world, we made a few sales to our very close family and friends (and ourselves!). The first few months were new and exciting, but they slowly reality set in and we found out just how hard it can be to sell life insurance when you’re new to the business and have no track record and no experience. Soon my friend decided this job was not for him and he moved on. Six months into this new business, I was alone. My wife never wavered in her belief and confidence in me, but I was not so supportive of myself. So when the going got tough and I found myself sitting in a windowless room at an insurance agency alone with only a computer and a phone, I decided I couldn’t do this on my own, I needed help, I needed a partner.
To make a long story short, over the next 15 years I spent countless hours and numerous efforts trying to create Partnerships with what I believed to be like minded professionals where 1+1=3. The area where I had the most friends and colleagues was in the law so shortly thereafter I found myself creating legal partnerships and trying to create a practice within it. In the law you can find many fellow attorneys looking to give you business, so long as you paid them a portion of the fee you received. While I gladly engaged in that strategy, I soon found the practice I wanted was not conducive to that strategy as I had to make my top line price too high to make the money I needed to make. In these “partnerships” we would do expense sharing, revenue sharing, division of revenue by origination, work and overhead. Some worked out ok for brief periods of time, but eventually one party always felt the balance wasn’t fair and the deal had to change. I had many moments of having to question my own vision and view on what was fair and equal as my beliefs were being called into question constantly. When I would capitulate and give the other side more of what they wanted, my internal guide would show me quickly the arrangement was not one I could live with and so quickly we would be back at the negotiating table or we’d be marking arrangements for new office space.
Finally what I came to realize after so many years of failed attempts, I wanted to be a “Part Of” a team rather than a “Partner”. I was always able to work very well with referral partners and colleagues to service clients which needed help in areas for which I wasn’t competent. I stopped the practice of paying referral fees so that I would feel confident someone chose to refer to me with the belief that I would do a good job for the person that needed help. I have absolutely no issue at all with the payment of referral fees (so long as all parties hold the same license) but it was important to me to feel I was being referred in for the right reasons. If you do decide to set up a revenue share, make sure it’s done for the right reasons as you should (and in some professions must) disclose that arrangement and your clients will know you don’t truly trust and have confidence in your referral partner.
When does Complimentary become Conflicting?
A partner must compliment what you do, not conflict with it. If you are an attorney and have a contingency fee based practice, how does that jive with an attorney that bills hourly and gets paid monthly? If you a financial services professional is commission and sales based, how do they reconcile that with a planner who charges flat and % based fees? While these areas can seem to be complimentary “You go for the home runs while I go for the singles” they day to day work and systems of these disparate type systems just do not work. How do you quantify time employees spend to track profitability when you may not get paid for their time? When year end bonuses come around and the contingency/commission based partner either had a terrible year or tremendous year, the feeling of what was fair at the start of the Partnership always changes. These issues and expectations should all be discussed and addressed at the start as they hardly ever “just work out.”
How does “Part of” feel like “Partner”
When each practice which has different goals separates and focuses, the result is spectacular. If you wish to revenue share with another practice, that often works very well as the other practice does exactly what they need to do to effectively and efficiently accomplish their goal and neither party gets involved in the other’s business. The message to clients is clear “They do this great, we do That great, for This, you work directly with them and for That, you work directly with us. By each of us having a dedicated focus and efficiency in our practices, we can deliver better value with more peace of mind.” When each “Part” solely focuses all efforts and resources at becoming the best “Part” they can possibly be, the sum of the client experience grows exponentially.
People and Goals Change
The largest constant in our world is change. I look back at the person that started my first business 20 years ago and while I remember some of the ideas and beliefs he had, our goals and priorities couldn’t be more different. I know for a fact that if past Steve and present Steve tried to become partners, it would be a Steve-tastrophe! So then imagine how hard it would be to partner with someone that isn’t even you. If you decide to move forward and partner with someone, you need to work very hard and keep the lines of communication constantly open to make sure that as your priorities and goals change, the partnership still makes sense to everyone.
It’s easier to dis-assemble an Ensemble
A very common practice for those trying to decide which route is the best for them is to start by branding themselves together through an “Ensemble” practice. The idea is to try to create a sense of scale by branding together to the outside world. Behind the scenes, the professionals run their own, separate businesses. The agreement may either be a revenue share or a cost share to try to create some scale. These situations can work very well as a transition to a full partnership. It very much allows you to “date before you marry” and get true experience with the other person who you feel may be a good partner, but you really never know. You can slowly introduce the other partners to your clients/patients/customers and feel out if their way of working with the end client/patient/customer is like yours. If it doesn’t work out, you can simply rebrand but all your systems and processes remain intact and in place and the separation creates little to no interruption in your business other than a quick explanation to clients. That explanation is often very quick and very easy as they have hired you as the professional they want to work with and when it doesn’t work out it’s not a real issue at all.
Trust your Gut
I think many of the best partnerships work simply because there is a level of trust and confidence amongst the partners that is the basis of the relationship. When asked why does it work, so often the response is, “It just does, so we go with it.” So how do you know “if it just does?” Trust your gut. A great union is so much more than a logical union that just makes sense. The true value comes that when the going gets tough, everyone jumps into the mix with a commitment to work it out and move forward. You never know really how someone will react until that moment of truth comes. However, if you are honest with yourself and clearly know what is best for you and your family, your “gut” will let you know if something is not right. When it is right, it’s just easy and it flows. It’s really that simple.