Business Partnerships: The Good, The Bad and The Ugly

If you can't communicate before the contract is signed, you'll never survive after. You gotta get that dialed in to where both of you are like, oh, I'm glad we talked about this. I will concede to your way, or, let's find some middle ground or something. But knowing this is how we're gonna get issues out, and this is how we're gonna keep on the same page. Because when you diverge from the same page, your partnership immediately begins to work against you. Welcome to the Sole Proprietor Podcast. I'm Curt Kempton.

And I'm Melody Edwards.

Each week, we dive into the ethical questions that keep entrepreneurs awake at night.

Whether you're building your own company or exploring life's big questions, you are welcome here.

Hello, Melody. How are you?

Hey, Curt. I'm doing good today. I'm doing well. And you?

I am wearing a beanie today, Curt.

We're twins, you and I both are wearing our swag mine from my former company, you from your current company, but with the old branding. So we both have our old branding on. It's hard to let go of old branding, especially when it's a comfy sweatshirt.

Well, I'll tell you, it doesn't get cold in Arizona in November very much, but today it's, like, the third day of rain, which multiple days of rain in a row is, like, unheard of. And I love the smell of the rain. But my sweet wife, she loves freezing the house. We spend so much of the summer just cooling our house down that the moment it's colder outside, even way colder outside than it is inside. Rachel's like, get it in my house. Get all that cold air in here. I'm like, but we don't have to make ourselves uncomfortable if we don't want. And she's like, put on a jacket.

And suck it up.

Yeah, buttercup.

That sounds just like Rachel. Yeah.

Yeah. And then she hits me with a whip and brass knuckles. Yep, that's how she operates. Yeah. So, yeah, I'm doing pretty good. And I'm excited. It's been a really nice week for me, and especially now that I see that my friend Melody is no longer sick. You look like a million bucks.

Thank you. I still have that night cough that doesn't ever go away until you forget that you ever had it, because one day it goes away. But other than that, I'm. I'm surviving. I'm practically thriving.

Practically thriving. Well, as Mary Poppins once said, you're also practically perfect in every way.

In every way. She's My favorite lady. Yeah.

Yeah. Well, you'd be a perfect partner for me. We should partner up on something.

I would love to be a partner because I love partnerships.

Yeah. Well, we could do a podcast together. We could just start another company. Just like, don't worry about what the company is. Let's just partner up.

Okay. I'm. I'm literally in. Let's just do it. All right.

That was my segue. How did I do Melody?

It was a little raw, a little forced, but I like a good forced segue. I think that's good.

Yeah.

Tell me a little bit about what you're thinking about partnerships as we get started.

Yeah. So I've, I've had a bunch of partnerships. It's so interesting to me because I love partners, partnerships. I love the idea of them. I love collaboration. And yet pretty much all of my partnerships, if you look at them in a one dimensional, like, did they succeed or fail? They kind of failed for various reasons and yet I still want that. Right now I'm thinking about it again. I'm thinking, do I want to take on a partner for hsva? I've always thought that I did want that.

I'm not somebody who needs to own a whole company myself. I've, you know, I don't have that. And I. We know a lot of entrepreneurs who. It's my baby and it's mine. And no, I can't bring anybody. Like, they couldn't even imagine having a partner.

Well, I go so far to say that's the majority of the people I know who own a business is that they're like, I've heard about negative partnerships. I will never participate.

Yeah. And I just love them. But I don't know if that's just a nostalgic viewpoint that I hold forever or if it's because I really, truly, truly love. Listen, I do. I really, truly love them.

Tell me a little bit about why you love them, because I have some thoughts that I think are going to be really in line with what you're going to say. And then I have, like, a whole list of counterpoints.

Yes. Right now, I have a really great relationship with my ops manager, Denise, and she is somebody who can we think not similarly, we understand how each other thinks. We are able to have disagreements about things and figure out how to come to a compromise. Her view is always like, how do we protect the team from too much Sparkle taking over? Which means Melody's chaos. Melody has 23,000 new ideas. How can we protect, like, what is the most important? So she's really a good partner in terms of, like, where our strengths are. And I also know that she's not going to stay. That was a temporary role for her, and she's not planning on staying in that role forever.

And so I think about this, like, do I want just somebody who's an operations manager, or do I want an owner? Do I want somebody who's taking ownership over this? And we're on the same path to growing. One of my mentors, Janet Casey, said to me a couple months ago, she does. I call her my mentor, even though I barely ever talk to her. But she's like my business hero. But she used to look at it as, like, a hundred percent of something. You want to own that thing. And her dad had told her something like, no, like, if you own 10% of something that's worth a hundred million dollars versus a hundred percent of something that's worth, you know, a million dollars. We all bring different skill sets.

We all have. You know, when you're in a good partnership and when you have, like, a good alignment, you can scale and grow and do things that feel good for each person together and make it a much bigger thing than when you're doing it on your own in best case scenarios.

Yeah. I think the motivation check is so key. Why do you want a partner? Is it because you truly need another set of complimentary skills? Is it because that person has money to bring to the table? Is it because you feel overwhelmed? Lonely? Despairing?

It is lonely to be a business owner. There's no getting around that. I mean, not for everybody, probably, but for me, it is because even if I have friends who have businesses, you're not doing it with them. When you work for a company, you're all in the company together. And if you're an employee, right, you have your fellow employees that you can share wins with or have that kind of relationship that's equal. When you're an owner with employees, you're never an equal. And even if I wanted us to be, we will never be Equals. I want somebody who loves to grow things because I love to create things.

But the part that I don't love is, like, all of this growth. We have great systems. We have a lot of great things. But I have weaknesses, and I could continue on. And, you know, in coaching groups or other things, they talk about working on those parts of yourself in a way. Like, I always just thought, oh, I just have to work harder and figure out how to do this better. And then there reached a point where I was like, why would I do that? That just steals my energy. It's like going against what I'm actually good at.

I don't need to be good at everything.

Yeah. I mean, there's a leverage aspect to partnership, and there's a validation aspect to it.

Another thing is when you make a decision on your own, it is much scarier than when another person agrees with you that that is a. We don't know if it's going to work, but let's do it. It always comes back to that. Like, the loneliness of business. I was not maybe prepared for that part of it. I don't always feel just lonely every day. But let me tell you, working in an office, at a computer, alone, away from teams, I do feel probably a lot more of that now in this company than I ever used to because I was around people before.

Well, let's talk about how most people pick their partners. I do have some points I want to bring up later, but you're already kind of on a roll. And I'm thinking about how people choose their partners. Because I'm in. I'm in a marriage partnership.

Same.

And we've done business together like my wife and I have done business together. Wasn't great. I mean, it was great until it was, like, exhausting. And you're sitting at the dinner table and you're like, what? Let's keep talking about work forever. Let's never stop talking about work which gets old.

Plus, it's just hard to be, like, having a relationship with someone where you always have to worry about this landmine of, like, work. So I think most people choose their partners out of convenience. I'm just gonna say it. I think that's where a lot of people get their partnership is. I know this person. They're cool. I had an idea.

They thought it was a cool idea. And then you get into your partnership and you realize that you have a bunch of overlapping thoughts, a bunch of overlapping blind spots, a bunch of overlapping skills. And I can tell you from my marriage, there's places we absolutely 100% need to be overlapped. And then there's other places we absolutely 100% need to be diametrically opposed. And I say need. You know, people make marriages work all the time and I think people make partnerships work all the time. But that is one thing that I've got that I kind of want to get this conversation started with is like the idea of auditing why you want to have a partnership and then deciding how to pick a partner based off of how cool they are and how fun they are to be around and how like minded they are versus like truly taking inventory and being like, I hate these parts of the business and I love these parts of the business because when I see a successful partnership, almost always one of the guys loves product and operations and blah, blah, blah, the other guy loves the numbers and the whatever.

Right.

Like the systems building and all that.

Yeah. The thing that we struggle right now with is our marketing, which I'm in charge of. And we, we're doing a lot of different things. But I'm not the marketing expert. I'm really good at weird marketing that's very niche and specific to certain situations. But, but like doing the regular Facebook ads and all that kind of stuff. Like, it doesn't really interest me. The creative part of it does, but I don't get into that part.

So we work with other people who have those skills. When I look at our internal team, like, we have the strongest team we've ever had. Denise and I were just talking about that today. We need somebody who's gonna lead that team on a daily basis, hold them accountable to the goals of our projects. That's not me. I, I am the worst person to hold somebody accountable to a deadline or a project due date or something. I can't do it for myself. Like, I have systems to wrap around me to keep me accountable.

But then you're going to put me in charge of other people's account. No.

Yeah, I agree.

And that could be a project manager. It doesn't have to be like. But there's a lot of different areas where somebody could come in and make things better. And you're right. When I've tried to have partnerships, I've looked at the skill sets and I thought I saw differing skill sets. And then later as they got into it, I hadn't given it enough thought because I just wanted it so bad. I realized later, well, let's tie this.

Back a little bit. I'm curious what your thoughts are. I think we agree on this. Is it a good idea to get married because you're lonely?

No.

Okay. Is it a good idea to get married because someone is fun?

No.

Is it a good idea to get married because somebody has an opposing skill set?

I don't know that I would choose somebody to marry based on that. It doesn't hurt, but it's not why I would choose somebody to marry.

Yeah, I married my wife because she was hot.

It's a good reason.

Yeah, that was definitely one of the first things I noticed. But obviously it goes into more than that. I don't think I need a business partner to be hot, but I'll tell you, my wife certainly didn't have that as criteria for me. But alone, all of these things are just terrible reasons to start a partnership, and they're going to end in heartache. Just to share a really quick, tiny little story. I've had my marriage partnership I'm pretty happy with. I'm in a partnership right now at this software company that I really like, and it's really unique. I don't know anyone else who has a partnership like the one I have in my software company.

Rob doesn't come around hardly at all. Like, we'll sometimes go two or three months out talking. Ironically, he just texted me just, like, right before we got on. And he's got some really good stuff going on in his life, and it was really cool to hear from him, but. But the story I want to just tell real quick, and it's going to be real vague for a reason. There's no reason to, like, air dirty laundry here. But I've been part of a partnership that I thought I went into really wise. And I think that if I went back in time and I didn't know what I know now, I'd probably do it again and again and again.

Like, there's no reason for me to overly be suspicious or whatever. And now that I know what I. I'm not even 100% sure that I could avoid it in the future. But my point is, is that the person that I partnered with, they're human and they have feelings and they have good days and bad days, and sometimes they make bad judgment calls. And even if they make bad, like, I make bad judgment calls, Melody, I do stupid stuff all the time. In fact, kind of that's the main thing I do, is try to get myself out of making stupid choices. But in this particular case, it really hurt. It really, really hurt.

And the partnership had to dissolve and it's made things awkward and. And I really Believe that if this partner could go back in time, I think that he would change the way he went about things. But I guess all I'm saying is, is, like, there's people who never get married because they hear about all the horror stories of, like, I don't want to get a divorce, so I'm not gonna get married. And I don't wanna have to give up half my property, so I'm not gonna get married. But as a guy who is a big proponent of marriage, he's had a really happy life and marriage. And I found just the right person for me, I think it's just a. You're missing out on a huge part of life potentially. And I'm not saying that businesses like that where the only way you can have a satisfying and fulfilling marriage are businesses with a partnership.

But I think that there's really bad reasons to not have a partnership is what I'm trying to say. Right.

Well, it's like having employees. Like, you have one bad employee experience. And we know people have done this a lot where they're like, I had an employee once. They were. It was the worst thing ever. I'll never get another employee again. And you're missing out on so much if you don't try again, if you don't learn how to do it better. But it's something that, I guess a certain kind of person just has to hear about it and they don't want to do it because they're scared.

Part of the risk of entrepreneurship is if you are willing to take the risk of a partnership that can go really, really well too. Like, that can explode. It's much easier, I would think, to grow a business with two people at the helm, if they're the right people, than to have just one person leading the show. Unless you're a really special one person. But most people I know, whether they are funding a business or they're like, they're just investors in businesses, they're still a partner. They didn't do it a lot of that on their own. Like, their growth, their expansion has come because they found the right partners and let that person build the thing or whatever.

Yeah, you got me thinking about Guy Kawasaki right now. Rich dad, poor dad Guy. He is a. You know, he talks about the idea of being an investor business owner. And, you know, the investor business owner really forces the idea of a partnership where I bring the money and you bring the work ethic. And it is a different dynamic because you don't start with, like, anything being your darling. The Only darling you have is make this amount of money much larger. In fact, earlier we were just talking about some of our friends.

We know people who are in that, that role and they just can do business in a totally different way. Maybe that we're not even 100% comfortable with.

Well, that wouldn't work for me. Yeah, money is great. But I think it's the part where I want that second brain. It's like you have an idea and you're like, I really think this thing could work. And having a second person who would be like, either you're not seeing this part or this is incredible. Let me tell you how we can build this. Let's work on it. Like, that's exciting to me.

Yeah.

I was gonna ask you, is it a good idea to get married to someone just because you want validation? And you know, again, it's one of.

Those barrel of like, not the only reason.

Yeah, right. It's like the barrel of qualities. Right. We're not looking for just one.

And I'm not looking for validation. I'm looking for that second brain, which. I don't know how to say it. I don't need them to validate the idea. I need them to say, hey, you're not seeing this, that other set of eyes.

Or to say, I will put both butt cheeks on the line with you. And I think that's of what I'm getting at here is like, that's validating for someone to say, your idea is sound. I have also tried to poke holes in it. I think there's a real need here. I've done the research, you know, because again, maybe you're the creative one and the other person's more of a researcher, numbers person. So your gut sounds good. I've taken that and tested it. Let's do this together.

And that, that can be powerful.

It can be. Yeah. When I had my holiday lights company, I decided to sell. But before I decided to sell, I knew I couldn't do both home service VA and holiday lights, like the day to day management of holiday lights. So I decided to take on a partner and I just happened to have somebody that I've known on the periphery for a long time, just like knew this person. They seemed to be a hard worker. They seem to have like, they were an artist. So they got things made.

They needed to make things and create things, which is a part of like that process. You have to be a good designer, you have to be a hustler. I'd thought about it a lot, but I had My brain had made the decision, like, I was like, this person's here. And so I did a project with them. It was kind of a test of, like, can we. It was a prom. We had to. We had to build.

We had a $15,000 budget to build sets for a one day event for a prom and design everything and put it all up and then take it down really quick. But I loved it. But this person was building props. They were designing the sets with me, and I never was working a lot with them at the same time. And when the day came for us to actually have to hustle, put the things together, they got Covid. And this was during, like, you can't go in here during COVID So I didn't get to do that part with them. But everything else they had done, I'm like, this is great. They're smart.

We can figure this out. I went to a lawyer beforehand. I went to a divorce lawyer. It's weird.

Oh, wow.

Because again, I've seen partnerships fail. I wanted a prenup where we would talk through everything that could possibly happen. Whether, like, one of us gets divorced. And then there's like, asset issues if one of us becomes a drug addict or an alcoholic or dies. I wanted to have all the answers for this thing. The one thing that I did not add to the contract, which I might have talked about before, I don't know, is, is what if we don't like each other anymore? Like, what if this person has bad habits like burping in front of customers? Or even our team was like, no, and I don't think. And she was so unaware of it. And it got to the point where I just didn't like her more and more.

I like everybody, but this one was hard. I like her as a person, but not as a partner. And so I paid her out at the end. If I had to do it again, I wouldn't have put her right in as a partner because I'd always said I wouldn't do that. I wouldn't have made it a owner finance. I would have had her put some money in. I always say, I'm not doing this ever again, and then I do it again. But I just felt guilty and I paid her some money, and then it was my business again and I sold it.

It was a really hard experience. I learned a lot. I did not feel good as a person. I didn't feel good as a business owner. Well, now I have a contract that I can use in other partnerships in the future. And I just have One thing to add, which is what happens if we don't like each other at a certain point, which is something that I know that goes way too deep, went way too deep with it. But also I'm so afraid of not having it work that I want it to be clear cut how we get out of it. But in the future, I wouldn't do a partnership that way.

I wouldn't just buy them in immediately to have them earn it.

Yeah. I like the idea of dating before marriage.

Yes.

Personally, I love that.

Oh, you don't like to just meet your wife. Right. The first time at the altar. Right.

So in business, I think we often can like say, well, I've known you long enough, so I'm going to just partner up with you. So I think that's wise. But one of the things that I kind of came in today having written down is like, what does that dating process look like? How do we know that we're in alignment? So a couple of things that I wrote down is obviously your vision and your values. Those are two things that you hire employees off of. I think partnerships have to really, like, have some really thick roots there. So that would be my first item to press on. The other thing I put next, that is velocity. One person might be really happy with a slow moving, stable, growing company without like breaking stuff and moving forward, where the other might feel like, no, let's get cash out as fast as we possibly can.

And getting that part wrong could be extremely painful.

Oh, yeah. And that's something we wouldn't normally think about necessarily when we're looking at partnering with somebody is like, I'll be honest, there was another time when I had the opportunity to partner and it was with somebody that I think would have been really a great partner because they would have helped grow. What I couldn't get over is how conservative they were on the financial aspect. It was very much opposed to how I was viewing how we would grow. And I could see for me, that would be a red flag, like, if I was aligned with like, our profit has to be this much money and it has to go into the bank on reserve. And from my point of view, I'm like, I'm putting it back in. I'm trying to make this thing work. It's either gonna die or it's gonna blow up.

But that's not like the best thing. But that would have been a huge conflict between us long term.

Yeah. As you talk about this, like sort of business prenup. And really, I think it's just Called an operating agreement. But just for the visceral feeling it gives, there's things you have to be aligned on. There's things like, okay, you're good at this, I'm good at that. You're creative, I'm not. You know, like, okay, those are all great and those need to be different. But vision, values, values.

The values are cool because we can agree. Like, I like to always start with the values discussion going, what do you hate? Tell me what you hate. That'll tell me what you value. And people are really good at saying what they hate. Sometimes they're not as good at, like, what they value. So I'm just thinking right now, a nice thing about an operating agreement is, like, if you infringe upon these values and show deliberate whatever, like, let's just go ahead and right now, while we're right here writing this up, let's just go ahead and decide what happens at that point. And burping in front of a customer, like, it might not be what you list, but the value might be, like, I always want to put forth a professionalism. I hate unprofessionalism.

Right, okay, great. So that means we value being professionals. Okay, great, let's put that down as our. Our value. What is the recourse if one of us just shows that they're just not going to be professional?

I like that you flipped that around. Because it is hard to say, like, I know what my values are. My values are, we're not going to take advantage of people. That's a huge value for me, especially being in a space where there's a lot of people being taken advantage of in the virtual assistant world. And so the fact that I am not into like, that's one of the core things, the core beliefs. I want to grow people. I want to. And I never want to take advantage if somebody comes in and says, yeah, but you'll make three extra dollars an hour if you just pay them less benefit or if we just scrape this thing off.

That goes against everything I believe in. And I'm not opposed to, like, money making decisions based on what we have. But I always want to be a people first kind of company. Otherwise it's not worth it to me. And I need somebody who maybe they're not emotional about their people firstness. You know, they don't have to be like, I am, but they have to understand and believe in that similar value. And my, in my view, do you see a point where that wouldn't make sense in a partnership?

I think there's Always an exception to every rule. So, yeah, I guess I could see that there's probably, like, I. I'm not coming up with one right off top of my head, but are you. I know you're familiar with, like, the Briggs Meyers personality tests. There's the Enneagram tests for if you're a big fan of Eos. There's a visionary and integrator test.

Yeah. The higher bus. The disk. There's a lot of tests out there.

Yes. So I guess the point that I would sort of, like, take all that to is once we know we're in alignment on some things that need to be in alignment, and we've used that sort of chart a course that we can both agree on, even in terms of velocity, then the question is, all right, cool. We figured that out. Now I need to be crystal clear on what I will own here. And one of the problems with loneliness or just needing validation alone, like, some of these different things that you can do to make a decision as to why you need a partnership. Problem is, is that if you're just exhausted and you don't want to own anything, but you're not ready to sell, you could be setting up a partner to really hate working with you.

Oh, yeah.

If you are there just for the validation and you want to micromanage the other person and do everything and own all of it, and you're just there because, you know you're. You need validation and you're lonely, you could be setting up your partner to hate working with you. So there's so many different pieces that need to go together that I feel you don't have to cover the whole spectrum. By the way, both partners are going to probably have some overlapping holes, but if you can overlap enough, that will help you to find the people who maybe will work in the company as an employee or something that. That will help mitigate some of the other holes. Maybe neither of you likes finance.

Well, you can hire somebody to do finance, and you just have to do the quarterly whatever, you know.

But if both of you are passionate about marketing and all creative things, and then neither one of you is, like, into systems or numbers or anything like that, like, you know, you kind of lost before you started.

Yeah. When I had my coffee shop, that was also a partnership that didn't work. And they work for a while. It makes me sound really bad. I know that. But for that one, I think he really wanted. He called it a partnership, but what I realized is he really was a control freak, and he wanted complete control how everything went. So there was no partnership involved once we started rolling.

And I was just more of labor and management and system. Like I was running the thing, he was funding the thing. But he also had ultimate control over the decisions. And at a certain point I wanted to back out and just say, hey, I will run this for you as a man manager who gets paid money. If I'm going to be a partner, we have to make. And he'd say the right words to me. He'd say, okay, let's try again. And it wouldn't work.

But when I end a partnership and every time it's been me who has ended it, it's because I want to preserve something. It's not because I hate the person usually. And I'm just like, you know, they're trash. I'm over this because for that they were my neighbor, they owned an inn, they wanted a coffee shop in it. I was like, yeah, let's do this. Because I wanted a coffee shop there. I wanted to preserve that relationship. And the last partnership with was with HSVA when I had Dean here before she left.

And that was a growth issue, not a business growth. Business is really hard. And when you bring somebody on who doesn't know how to run a business or hasn't had that experience, sometimes you don't grow into that experience. And we both made a choice. It wasn't just me on that because it can really affect your mental health, your physical health. I live it, but I'm used to it because I've done it for so long. Not everybody is.

So once you've sort of like gone through those conversations up front the best you can, you've set yourself up to kind of win. But I'm thinking about several different conversations need to be had. And some, some that are popping into mind is equity.

Yeah.

Who owns how much, what percentage of the company?

Never.

50, 50, because why?

Because I've seen partnerships who go 50, 50. If you both are in disagreement on something, there's no person who actually has the decision making ability.

Final call.

Yeah, you need. Somebody has to have the final say.

And the thing is, is that you actually could be 50, 50, or even a minority partner in your operating agreement. It's possible to write in as the managing member or the manager of the business and you know how decisions will be stamped. So if one person's more powerful from a money perspective and you decide that you're going to give more power to someone who's less invested financially but maybe more invested in time, then okay, you Know, like that can happen, but you have to know those things. Like, like that's the thing is you certainly can't have 50, 50 decision making power. That won't work.

No, it doesn't. We're also talking like, these people are all reasonable. Like every partner is going to be reasonable. I've seen some partnerships where people become power hungry once they have ownership over something. They don't care about rules, they're not going to care about a contract that they signed. And then it either has to go to court or you give up. You know, like, it can get really, really messy because you start with the idea that, well, we're both emotionally intelligent people who are going to make rational decisions together. I've seen people change really fast when they get a sense of ownership over something.

That's the key element here is that it can't live in the contract. It has to live in practice. So when you're still friendly with each other and things are going well, whoever actually ends up making the final call, regardless of what the contract says, is the person that's going to keep making the final call. So if you're a pushover and you know that about yourself, you need to be clear on what you're signing. And then you need to be clear that you're going to enforce right from the get go because it's the habits that are going to end up making the business.

It can be a very complicated relationship. It can also be really simple, too, depending on the people. How do you find your relationship with Rob? Like, is it pretty simple in terms of.

Yeah, it's. It's like, rob, I need your counsel. And he's smart and I, I almost always follow his counsel, but he knows that's what it is. It's just counsel. We might not cross paths for a while. We always have a board meeting every quarter, so we will see each other every quarter. But it might be a phone call or a text message like, all right, I'm about to jump. Tell me not to jump if I'm.

If you don't want me to jump. Like, I feel like this is the right way to go. It feels extreme. You know, whatever it might be, this might be going a little too far. But it does feel a little bit like a therapist relationship. He's not in it every day and he can have that sort of outside view. Same reason you'd go to a therapist is that while he might not be necessarily trained in all the ways, he definitely has that other perspective where he can say, I think you're too close to it, man.

Yeah. And you have to have that trust developed, though, too. You have to have the. And you are a person who. You develop a relationship, and you can develop the trust. Then you're willing probably to say, okay, you can hear what he's trying, you know, saying to you, even though it might not be the thing you want to hear. That's just a good partnership.

Yeah. Good relationship and partnership. I always know he trusts me, too. That's another thing, is that when I tell him something and I'm like, look, I don't care to be right. I want to get it right. I don't need to be right right now. And he'll always say, you know, Curt, you're a wise man, and I think you brought up some really wise points. And can I have some time to think about it or just can be little passing things.

That doesn't make me feel like I'm his baby. To be babysat. That means a lot to me.

Same. I feel like I'm very honest with people. I'm thinking of my team. I'm thinking of Denise. Like, we are. I try to be extremely honest, even when. Because that's why I can talk about my weaknesses, you know? And somebody who maybe wasn't as trustworthy as Denise is, like, maybe there's. When you're that open, when you're that vulnerable with somebody, if they don't have that, like, inner wisdom to be able to know, like, how to address you in the way that you're going to hear, then it can go very badly.

Because if Denise said something to me, like, that's a dumb idea, well, I'm going to close up. I'm not going to want to tell her all my other dumb ideas, you know? Yeah.

Like, hey, if you thought that was dumb, I got to know.

Yeah, but that's like, the trust building is so important. I am a ride or die person, by the way. Like, I will ride or die with somebody if I believe in them, if they're trustworthy, if they work hard. It doesn't have to be like, hard work, like physical labor hard work. But if they are putting in the same effort for what they own, you know, if they're taking ownership, I'm going to ride or die with that person because I know how valuable that is, and it's rare.

I'm also that way. There's been times when I've thought, you need to be a little more discerning and less ride or die. I think that's a kind of different conversation than. Because I think that once you make commitment, you do need to be ride or die. Like, we're trying to make this work.

Yeah. If you build the trust, there's no reason to not be ride or die unless. But that brings me like, I like that about myself. I like that I'm going to be the person that is going to be there for you, just as I trust you'll be the person who, you know is there for me in terms of whether I need advice or counsel or we need to solve a problem.

And then there's other things that will surprise you. I need you to get out of bed at four in the morning to help do this thing. And they're like, oh, well, I draw the line 4:00am it's too early. And you're like, ah, but, but I thought you're my ride or die. So it does have disappointment built into it sometimes. But it is a better way to live. I agree with you that it's a better way to live. It's just that it is sort of infused with a lot of disappointment along the way.

And risk, there is a lot of risk. Like when I think of a partner, even in our company, when I think bringing in a new operations manager, for instance, if I had to do that, it is such a hard decision to bring in a leader because you never know what you're getting. Even if people have said, oh, this person is great, even if they've done the best in their interviews, you've done the values assessments, there's so much. It's really, once they get started, like what's actually happening. And I've had some pretty bad experiences and it's exhausting when that happens. I don't want to go through that.

That actually is something I wrote down. And I want to look at this bigger. Like risk. I want to look at risk bigger. Okay, so in a business there's a lot of risk. Some of the risk is that emotional stuff I was talking about a bit earlier and I think you're kind of hinting at. But there's also financial risk, there's reputation risk, there's like your time risk, like, who's going to be the one that has to get up at 4 in the morning. So one of the things I wrote down, as you're sort of getting ready to sort of solidify dating into marriage and you're kind of.

You're not in the honeymoon phase yet, when you are trying to write stuff down about who is it that's going to have more equity, who Is it that's going to have the final say? Who is it that's going to contribute the efforts in these particular areas? The next question becomes who assumes these risks? Now, I understand that as a business entity. A business entity generally takes the risk and then it's divided by. By equity, essentially. But how are profits going to be shared here? Let's discuss that. What happens if one partner can't keep up financially? Now, that could be that you've agreed that you're each going to keep putting money in for a certain period of time and maybe one person can't keep that commitment later. What does that look like? It also might mean we plan to take money out at a certain point, but the business isn't ready to start sending money out. Who assumes that? I mean, are you both just going to assume that equally?

Yeah, that happened to me. And what ended up happening is I took on the risk because I felt bad and I didn't write that part into the agreement like I should have. So if there was not enough of our deposits coming in or something, this other person was still getting their paycheck and I wasn't. And that's a mistake I wouldn't make. Again, like, there has to be a clear decision.

But imagine having that conversation early.

Yes, well, exactly. I think we might have, actually. And I think I was just like, don't worry, I'll take that on.

Okay. Yeah. That's one of those things where the habit will override the contract.

Yes. And I did that with Dean as well. At times. We both took a risk, but I know that my risk is different than hers. She was in the Philippines, and they don't have credit cards. They don't have other methods of going to a bank and getting a loan. If you go to a loan place, it gets really bad quick. Just like if you're here, you don't have credit.

Like, I'm just making it my problem when really in a true partnership it probably shouldn't have been that way. But that was a melody issue.

But there's another one that I think a lot of people don't think of is when business starts to get good and people start adjusting their standards of living. What happens when there's a recession of some kind or we got to pull back and we've agreed this is how we're going to spread profits about, but we don't have profits and someone says, well, then I need my pay increase because I can't keep my standard of living. You see how, like, making a personal decision that In a normal business, like, well, look, you know, this is your paycheck. Just live off your paycheck the way you can. People can start making decisions that will genuinely really affect, as the owner, the other partner. And these are discussions that have to be had.

Those are easier discussions, though, because if you're operating on, like, a yearly plan and you've got your quarterly meetings and you're doing like a prop. I like doing a profit first kind of thing where you've got your salary because you're doing work in the business, right. And that, you know, you have that salary and maybe it's lower, but then you get that quarterly profit disbursement based on being an owner and how much of a percentage you own. And then you set aside a certain percentage of that profit for. As a buffer. Like, that should all be decided ahead of time. In my. In my head, it should.

But I've seen it to where you can start feeling like, well, they raised their standard of living. I don't want them to have to sell their house and do this thing because they've learned to count on these profit shares and these distributions and, well.

That'S a them problem.

I understand. But when you're partners with someone, it becomes an us problem pretty quick.

I know that would be a total us problem, but I don't know that person right now, so I'm just making it a them problem.

And so that's kind of the whole point of this list I'm giving you, Mel, as you're talking about going into partnership, the list that I've sort of put here together. It's really good to think about this stuff now because it's. Right now it's so arbitrary. And it's not. I'm not digging my fingers in on anybody. I'm just, like, trying to figure out what we do here to mitigate. So let me give you another one. Exit the exit scenarios.

How do you unwind a partnership if there's an exit opportunity and one wants to go and one doesn't.

I was just talking to a friend about this because he wants to go and the other person doesn't. And the. The way that it was written up, that other person has the ability to basically tank letting that person go. He was like, oh, man, I really wish I hadn't signed that. But he didn't know at the time. Like, he was. Just.

Because it was arbitrary and there was no fingers. Like it didn't have that.

Exactly.

You weren't close enough to it. I'm sorry to hear that it's not working out the way that he wanted. But that is exactly the point here, is that when you had your cold, hard feeling facts and you were signing the paper, this was the best decision that you could come up with. Now, he might never sign a paper like that again, or at least with that clause. But I think that that's, that's something that you also need to think of is like imagine, just imagine that one of you wants to leave and one of you doesn't.

I definitely had that written into our agreement, but there are so many scenarios that come up with that. The good thing about all of the problems I've had with partnerships or the decisions I've made with them is that I have had a life of experience at this point with everything that can go wrong. And I do not wish that that had happened. But just like I had to repossess one of my businesses, don't wish that happened. But I have had more experiences on my level than probably a lot of business owners ever have. I can use that experience now to guide me much better than I would have before been guided. It's not cynical. I'm much smarter about it.

It's a less emotional decision. And on top of that, Matt, my husband, he is my buffer on what I am will, what we're willing to do for other people because he's seen the effect of what happens when I give too much. It affects us. It comes back to us.

It's an OS problem. It becomes an ass problem.

Right. It's not just a melody problem. It's a whole family because they're, they're here too.

Well, the I put down was communication. This is a tricky one because I, I was thinking a couple different things. The first is, is like how you know. And this is not personality test kind of thing. Usually. How can I communicate with somebody? Can I be really direct with you? Do you need kid gloves? Do you need me to rub your back because I'm telling you hard things? Or are you the kind of person who really just wants constant, maybe even harsh feedback? Like, and again, this is personality stuff. I'm not saying like that. Don't get someone who's not tough.

No. Like, know who you're getting. Right. So there's that side of communication, but there's also like the frequency and how are we going to get information across? So, for example, when you go into business with someone for the first time, they might be shocked to find out that you want to meet for 15 minutes every day. Like, that could be just like, drive them up the wall.

And that might be normal for you. That might be normal. And they're like, I totally get that.

Weekly, monthly, you know, whatever they are. Right. The point is, is that if you can't communicate before the contract is signed, you'll never survive after. You gotta get that dialed in to where both of you are like, oh, I'm glad we talked about this. I will concede to your way. Or let's find some middle ground or something. But knowing this is how we're gonna get issues out and this is how we're gonna keep on the same page. Because when you diverge from the same page, your partnership immediately begins to work against you.

Yeah, I'm thinking of my partnership with Matt because we often have communication glitches, as I call them. I mean, he's speaking English, and I'm speaking. We're not speaking the same English all the time. This is very common for people. That drives me crazy, and I love that man very much. But I think that when I experience that in business, I'm a lot less tolerant of that nowadays in my life, I just want somebody who's going to be straight. And not that I'm now away from my marriage with Matt. Like, I'm not saying this is what happens there.

I'm just saying I know what I want with a business relationship. I want somebody who's going to be very, very frank about what they're feeling or that they know how to bring that out and that they're willing to say things that are hard that they think I might not want to hear, but I have to be open to that. And in the. In. The sooner you get to that, the easier it becomes to do that. Like, if you're married for 20 years, and if I say the word pickle to him, he is triggered because he hates pickles. Right. And I say pickle all the time.

Well, I don't. That was a weird example. But you know why? It's because of the Thanksgiving episode. Yeah.

Like, you're still thinking about pickles. You coming?

But, like, if you can have conversations with somebody where you can trust the honesty that there is there, that's what I need. Some people would never want that. And I was on a podcast with Dan Plata last night and Rob Anderson, somebody who likes to just tell it like it is, and they both are like, tell me exactly what you're feeling and. Or what you think of this thing. And I always say, because my imagination is going to do much worse, you know, don't spare my Feelings. But in the beginning, if you start that way, it doesn't become an emotional issue later. Most of the time. Yeah.

Because there's no triggers involved. Like, you've both agreed that's the way you want to communicate. It gets harder when you're not clear. Communicators, I would say.

Well, yeah, if you have made the habit. So you discuss it, you understand it, and then you do it on a regular basis. It's just not something you have to think about anymore. The problem is when you. When you understand it, you do it. And then you just do whatever the heck you're gonna do. It's really hard for someone to go point to a contract later and say, remember when you said you weren't gonna be so mean? And you're, you know. Remember when you told me you're gonna tell me how you actually feel? And now, like, here you are bringing up an issue that's been here for three years, beginning.

You're finally blowing a gasket. You promised that you were gonna, you know, like, come on, like.

Yeah. There are so many risks in partnerships, and I still like the reward. And it's funny, like, any other person might have heard this and been like, man, I'll never do a partnership after all this because what are the chances of actually aligning? I think it might be better. The chances might be good if you ask all of these questions.

We're getting close to the end here. Let's sort of circle the wagons here. I'm trying to put together all of the things that we've talked about today and make sure that everyone has a checklist. Melody, this is something you're thinking about really hard right now. So.

This week? This week. Just so you know. Yeah. And I've thought about it over time.

But I don't even know if I'll want a partnership next week.

If I ever found the right person, if it happened, I would totally go for it. But I don't want people thinking I'm, like, out there seeking the partnership as we speak. No, it's just something I think about a lot because I'm around other people who have great partnerships, and I'm like, oh, I want that thing.

Do you watch the Office?

Who do I watch? Yes, of course.

Okay.

Okay.

I love when Michael Scott comes in and he's like, pam, I need an orphan. I saw Oprah. She got orphans. It was amazing. Give me an orphan. And she's like, well, Michael, I don't know. It's very expensive. I don't know if you could do it.

He's like, well, find me a cheap orphan. Maybe like someone in a third world country or something. And she's like, you know, Michael, it's a really big responsibility. It can take months and months, you know, process. He's like, months and months. I don't know if I want an orphan in months and months. You probably won't, Michael. So partnership kind of the same.

So if I sort of were summarize some of the things that I'm trying to like bring up today as people are thinking about partnership. The first off is what gap are you trying to fill? What part of you are you trying to complement? So can you find somebody with a certain set of skills, a certain set of demeanor, you know, like background history?

You can have a really good team that operates right. I have a good team and they are operators and I can still want a partner. And I think sometimes people think of partners as. Because we're talking about work. Like what is the work? If you have a team, you can still want a partner because maybe you want. Want to expand what you're doing.

Oh yeah.

But some people might just be starting out because they want to start a business and they think it'll be better with like there's a difference and we didn't really.

Yeah. Depending on where you're at in your journey, you started wanting to have 100% of the pie. You realize you sort of hit the limit of what you can do in this business. Now adding a partner, you're kind of stuck until you can find someone to unlock that. And that's where finding someone cool who will validate you is probably the wrong choice.

Well, and you could hire an employee who can do that other thing, but they're not going to be ride or die necessarily. Like they are not in it with you for the long haul necessarily. I think there's a real benefit or motivated to it. Yes, they're not self motivated. A lot of times you, you have to be the motivator. Like that's part of building a culture.

And you know, profit distributions are a motivating thing to someone up in that owner level or partner level, where an employee just isn't. The compensation plan just maybe can't match what it would be.

That's the equivalent of like performance bonuses or something. Like I think for an employee, a profit share is not always. It feels very arbitrary. Maybe because they don't know whether you're going to have profits or not. It feels like they don't have a say in how that will Go. When you're an owner, you're taking the risk. You understand the risk. I don't think it's the same for employees.

It's not. Because if you, if you do profit sharing over them, reaching their metrics as an employee, then their incentive plan matches and lines up with what they do and what they can control. Makes perfect sense. That's great. But it's not the same as someone getting profits through the whole profitability of the company or somebody who's getting profits based off of just company performance in general, even company culture maybe. And the fact is that if you did try to use that for an employee who had a certain like circle of influence or control and then you were bonusing them based off of things that were outside of their influence and control, that's when it becomes arbitrary and meaningless and you're just basically throwing good money after sort of a bad incentive plan. And that's where that partnership level, like I'm in the partner meetings, I'm making the hiring decisions for that I am deciding what budget we're going to release to the marketing team, to the sales team, to the operation. Those types of things all add up and it can mean a lot different.

To your point, someone who is just starting out and hasn't done anything yet versus somebody who has maybe become, you know, hit that growth ceiling. I'm just going through my notes here. So first we start off meaning intentionally to fill a gap within our own skill set or abilities, right? Finding the person who is different than you. And then there's the person who is the same as you. The same person values, vision, velocity, throwing those three things out again. Then there's the non negotiables. What is it that we absolutely 100% must agree upon? I will make the final decision or you will make the final decision. You will financially be embedded the company to this much and I will be sweat.

But I will do these and you will be responsible to get up at 4 o' clock in the morning side by side with me if necessary. We will communicate in this way. Getting all those non negotiables hard conversations done before the actual honeymoon. How can you test that before you sign the papers? I'm not saying it can always be done, it's just, it's that habit. It's what happens in practice is what's going to happen in practice. If you have a contract in place that you plan to refer back to when you do the gotcha. There's an old Nate Bargassi one, he's like, I Remember, like, I do my own laundry, you know, and he was gonna, he saved that. He's like, when my wife gets mad at me, I'm gonna throw that in her face.

And that'll work really good. And then turns out when she's mad, he throws it out. He's like, then we had a whole other fight I wasn't even prepared for. It doesn't work that way. You can't, like, have this, like ammo thing ready when our practice has shown that this is how we do it and all the contract does. Not that you couldn't enforce it in a court of law probably, but even in a court of law they're going to go back to like, cool. That's what it says. But had you ever actually taken a deposit to the bank before? No.

Okay, well, it's really going to be hard to enforce this contract and frankly, from a personal life perspective, it's just going to be miserable for you. So the question I would say is, can you take this sort of list of where you're going to be different and how you're going to operate, where you're going to be 100% in agreement and alignment, where you're going to operate and then from a perspective of like, what you're going to own and all the non negotiables that have to go into place. Can you get any period of time before you actually become a partnership where you can prove that in practice you're carrying out the things that you actually want to agree to?

Man, there's a lot of things here to think about. I'll let you know what I decide next week. Tune in Melody.

Making a partnership in one week.

Well, yeah. Yeah.

I knew the day I met my wife that she was gonna be my wife. So, like, maybe. Maybe.

Yeah, Maybe I'll just meet the person and they'll be the one partner that I need. This has. It'd been a fun conversation for me. I love talking, debating, just like different things, tossing it around. And I don't have anything in the works, so I don't have anything to really worry about here. But I like that I've been thinking through it with you and I'm going to think more about partnerships because this partnership is working. I didn't say that, did I? I mean, I've been married. That partnership is working.

This partnership in a podcast is working.

Yeah. Honestly, I would hate to do a podcast by myself. I hate it.

Right?

But I love this. Yeah, yeah. As long as I don't ever have to edit the Podcast or post it or put any show notes up or advertise it.

And I'm right there with you, as you know.

Yeah. But no, Melody, thanks for being a fantastic partner. And I know it's kind of a cheesy way of bringing it up, but, like, I think that this really does personify what we're talking about here. It really brings it to life that you and I are a shining example of how, like, one plus one is, like a hundred, you know, when it comes to this. Because I've thought about doing a podcast for years, but, like, I just wouldn't. Even if I started it, I already knew I would end it, like, almost immediately.

Yeah, no, I totally get that. And it's the same for me. I mean, I have my other podcast. It's on hiatus right now. I'll bring it back sometime. But I'm enjoying this one so much that I like focusing on this. It's fun. Even when we're talking about hard things, somehow that feels fun to me.

Am I a masochist? I'm not sure.

Yeah, the controversy is the fun. So.

Yeah, it is. Well, thank you, Curt. It was a pleasure.

Thank you, Melody. And for those of you who are tuning in, thank you so much for joining us again. We really love having you part of this conversation.

Thanks, everybody for joining us at the sole proprietor podcast. It has been an absolute pleasure having these discussions with you. If you wouldn't mind taking just a few minutes to rate and review us wherever it is that you listen to podcasts, it would mean so much to us. We really do read each of these reviews and it gives us the opportunity to get the word out to more people who could benefit from hearing about topics that like this and so many others. If you want to engage with us at our website and maybe share some topics or ideas of other people that you'd like to hear on the podcast, feel free to go to soleproprietorpodcast.com and share with us your thoughts and ideas about what we could do in the future to bring even more light into the world.