How To Avoid Bad Partnerships
Most end in ruin.
After the last posts on strategic alliances, I reader sent me this question:
"Great topic Danilo. We're aware that most partnerships end in ruin, so would love to hear your thoughts on how to properly vet opportunities."
As some of you know, I've had a few partners in the past. A couple of them have been incredible. But the vast majority were not.
There are hundreds of other independent advisors who are certainly more experienced than me on this, and may have a tried and tested vetting process for new referral partnerships (if you do, let's chat!). But this is what I learned so far:
- If someone is purely transactional, I'm not interested in the partnership. An unprofitable alliance won't work, but there are other things I value and care about besides my operating profit.
- If someone is not adding significant value to the partnership, I'm also out. Skills, business assets, and marketing reach can almost always be bought in the market, and doing so is usually easier than structuring and maintaining a formal alliance.
- If someone is relying on the partnership to pay their bills, I'd also likely decline. While it's great to have partners with "skin in the game", you want to join forces with someone who's financially robust and can't be easily put into a corner.
Looking back, I see that my first partnerships very much reflected my fear of failure and lack of self-confidence. I believed I needed someone to bring more value to clients not because it would benefit them, but because I wasn't bringing it enough myself. That's not how you want to think.
As Taylor Welch said,
"Treat every partnership deal as if you can’t get out of it. This will properly tighten up your filter. If I know I’m “stuck” with you for 10 years, it’ll slow us down and we’ll make the right long term call. The partners I’m building with now are 100 year people.
Beware opportunists and don’t be an opportunist yourself. The greatest relationships are born out of service and maintained from service."
You don't need many partnerships. Just the right ones.