The Do's and Don'ts of Business Partnership...

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Good afternoon. Happy Friday, everyone. My name is Katie McManus, business strategist and money mindset coach for ADHD business owners. Welcome. I'm coming to you live on my cell phone, on Instagram, over on the Facebooks, on LinkedIn, and on YouTube. Kind of dropped Twitter. I don't really have anyone who follows me on Twitter, so, I mean, it really doesn't make sense for me to go live on Twitter and it's not even called Twitter anymore, so there we go. But I just want to do a little housekeeping sometimes. Not all the comments show up from all the places. So I do love this to be interactive. If you're watching this and you comment and I don't call you out or I don't put your little comment on the screen unless he said something super offensive, it is not you. It is just the technology not agreeing with us. And that happens sometimes. So just want to do a little disclaimer there. I also am a little distracted because I'm. My dog has just climbed on top of all the clean clothes that I just washed and folded. Half folded, let's be real. I didn't fully fold everything, but, like, there are piles of folded stuff, and she's just on top of them and. Yeah. Anyway, I want to make sure. Am I on the right audio? Let me see. Yeah, I am. Okay. Beautiful. You know what? Actually, I'm gonna turn off the air conditioning because I think it's gonna be loud in the background. Hold on one second. I'll be right back, everyone. Okay. I'm so excited for win, for winter, for summer to be over. I'm not a summer person. I don't know if you guys are. I do not like the hot weather. Hot weather and I do not make, like, a nice combination. Anyway, we're not here to talk about the weather or air conditioning or laundry. We're here to talk about business partnerships and how to do them well and how you can do them and have them end up badly. We don't want that. Right? So I want to share my experience from when I first started my business, my experience of thinking that I needed to do a business partnership to have any credibility because I was new and I didn't really know what I was doing. Hi, Rav Rush. Good to see you. Welcome. So anyway, my dear friend Kelsey and I, Kelsey Lackau, if you don't know her, she's an incredible. Hi, Jason. Welcome. She's an incredible life coach out of Santa Cruz, California. She and I were actually in our coach training together and we just kind of hit it off and we became friends. And she'll, she'll say that I'm the extrovert who adopted her, which might have happened, but we just are really close friends. We both started our businesses around the same time, and I think we're both kind of insecure about putting ourselves out there. And like we were, you know, late 20s, each one of us, and we didn't have a whole lot of confidence in what we were doing. And we also found that we got really lonely doing it alone. And so we got this idea and. Hi, Jason. We got this idea that we would start a business together. Hi. Andrew Stout. Oh, I owe you a dm. I'm sorry. Yes, everything's good. We, we had a tornado scare this week, but everything's fine. But we were convinced that we would start a business together and that would be really powerful. Hi, Jessica. Welcome. And we started this company called Action Incubator and we did a lot of promotional work for it. I think I still have pictures from our little photo shoot that we did while we were filming content for it. We planned out a whole 12 week experience. Experience. We even started marketing it and we got like into this marketing plan. We realized that, like, we were speaking to different audiences and we had this really, like, sweet, honest conversation with each other, you know, where we realized that what we really wanted, like the business partnership wasn't working. Right. It just wasn't working. Like we were speaking to different people and, you know, just. It's fine. It was fine that it wasn't going to work, but we realized it was coming from a place of loneliness and wanting a creative partner more than having a business partner. Right. Because here's the thing about starting a business. You're starting a business, you're putting yourself out there, you're getting clients, you're serving those clients. In addition to that, you are now a one person marketing team. You are now a one person content creation machine. And that takes a lot of creative juice. And when you're used to working collaborative, collaboratively, I can say words with a team and you're all of a sudden working on your own. It can feel really lonely and scary. And so what we both bumped into when we were starting this on our own is that we were feeling lonely and not inspired because we were all alone. We didn't have anyone to bounce ideas off of. There's nothing wrong with seeking out collaborative partnership. But whenever you're thinking about doing a business partnership, I want you to do a real gut check with yourself and with this potential partner. Is it really a business partnership? Like, do you both bring things to the table that you don't have anywhere else or, and is that going to be what's needed for this business entity? Or is it a lack of confidence on both sides, you know, telling you that you need someone else to make you more credible? Or is it some loneliness and, and some desire for creative collaboration? Okay, none of that's wrong. None of that makes you a bad person or, you know, foolish or, you know, unintelligent or whatever. It's just a natural step in starting a business. If you are committed to doing a business partnership forever, there are a few things that I want you to truly and deeply consider as you are establishing this partnership with this other person. Okay? Number one is the money split. Okay, so oftentimes when I talk to partners who are. And this happens every single time, I'm not, I'm not just like pointing out to one person every single partnership I ever talk to who are considering hiring me as business strategist or, you know, are showing up in a room where I'm answering questions. Oftentimes the, the idea of revenue split is that it's going to be a 5050 split. And I understand why, because it feels really egalitarian. It feels like that is going to be the most ethical thing to do for everyone involved. And there's no uncomfortable conversation of justifying why one person should be paid more than the other. Now, there are some real dangers with the 50, 50 split. Okay, I know it sounds good. I know it. Like on the surface, it, it kind of points to everyone's going to be happy here. However, if it is an even 5050 split and there's no consideration for different levels of work being put into it and what kinds of work, things can get resentful real fast. Okay, so let me give you an example. I have, I have a colleague from a few years ago who had started a venture with another person. Okay? They're both very, very talented marketers and they were starting a course or a training on marketing. Okay? One of them was really, really good at signing high ticket clients. The other one was really, really good at selling the digital courses. Now this was a high ticket group experience training a bunch of people. All right? So person A, who had that high ticket ticket selling experience, sold the majority of the seats in the group. Okay? Person B Sold a few. Sold a few and did a ton of marketing for it, but wasn't as effective in enrolling clients for this program. There was a ton of resentment. They did the same amount of work, they delivered the program together. The clients were very happy with it. But at the end of the day when there was a conversation about was this actually a fair split? No, it wasn't. It was very beneficial to person B because they did less work and got paid the same amount as person A. But person A did a lot more work. Because I want you to think about if you're doing marketing and it's really effective and you have an audience that you're speaking to that is used to buying that kind of stuff from you, you're. You have that trust. So when they see your marketing about the thing, they're going to want to get on the phone with you and not someone else, right? So they're going to get on the phone with you. You're then doing a sales call and that's like anywhere from like 15 to 45 minutes. And then potentially some follow up calls and then also follow up emails and then, and then, and then there's just a lot of stuff that goes into it. If one person is doing the bul that work, that is not necessarily an even split in work for an even split in pay. So when you're thinking about doing a partnership with someone else, what I always recommend is some kind of dynamic payment structure. Okay, so say, say you, one of you is selling to one client. You can do the person who sells the program get 70% and other person gets 30%. Now this incentivizes both partners to do more work to promote and sell the program because the more they sell, the more they get that 70%. Now you can also divide the work differently, right? So if you have one partner who loves doing marketing and sales like I do. Hi. One of my favorite things, I've been in sales for a really long time. I really enjoy my marketing and talking about the cool things that I do with clients and the results that they get and blah, blah, blah. There are some partnerships where I fully plan on being the person who's doing a lot of the sales. Now there are other things that I don't like doing. And say I had a client, I had a partner who really enjoyed doing accounting and bookkeeping and dealing with taxes and forms. I would love it if they took that off my plate. Now we'd want to make sure that time wise it was equitable. Right? So that's, that's a case where you could do a 50, 50 split, depending on the time. However, if you're both finding certain tasks miserable and you've decided to split those tasks, you want to make sure that whoever is doing more of that task is getting paid for more of that task. Right. This is something that you want to plan initially in the. In the membership or in the. In the partnership. And also set the expectation that you're going to be revisiting this later, like six months in, a year in, and just make sure that it's feeling equitable and good to everyone in this situation. Okay. Another thing you want to really look at financially is how much money stays in the business. Okay. Because it's really easy to see, like, $100,000 come into a partnership and think, great, 50,000 is mine. 50,000 years, we're done. But you want to remember, like, there are a lot of costs that go into starting a business, and how much money are you putting aside with each new piece of business that's coming in to make sure that those costs are covered? Okay. All right. Oh, my gosh. Okay. Okay. I just got pitch slapped in my own live. I'm good. I'm gonna actually block this. How do I block it? Oh, my God. I got pitch slapped twice. Geez Louise. Okay, so just a little etiquette thing. If you're watching someone's live, if you're showing up in their comments, if you're showing up in anyone's sp face, it is not cool to pitch slap them. It's actually not cool to pitch slap them anywhere. I appreciate, like, being forward and asking for what you want, but also, like, this. This is not the format to apply to a job, Jason. Yeah, it's damn rude. I agree with that. Jason. Yeah, I'm not even going to say this person's name because I don't want to give them any more exposure. I'm actually gonna go and just block them. Hold on. Give me a hot second. We're gonna make sure. Gotta go look at my own life to look at the comments. Gotta look at this person. Okay. Okay. Excuse me, everyone. We're just having a blocking human break. We're gonna block this guy. There we go. We're done. All right, Lovely. All right, so back. Oh, no, Andrew, he's doing it to you now. Oh, my God, this guy. Ew. Ew. We don't cold pitch people, everyone. It's bad form, and it doesn't work. Like, if you thought that was gonna work, like, I'm so sorry. That is not how this works. Anyway, Jason, you're safe over here on Instagram. This is happening over on LinkedIn. Anyway, if you ever feel that inclination to cold pitch me, just, like, go and put, like, a sock in your mouth and, like, do something with your hands to keep it busy. Like, just. Just stay away, you know, just, like, do something to shut down. Maybe dunk your face in some ice. Like, let the feeling pass. And don't cold pitch me. Okay. Anyway, so. Okay, so that's. That's consideration number one that you want to think about if you're doing a partnership. Now, number two, I want you to really get real with yourself. Is this actually a business idea that's going to require two people to have a successful business together, or is it a desire for collaboration? Okay, there are a crap ton of ways to do collaboration with other people, like Kelsey, so she is still a very dear friend of mine, you know, at the point where I do retreats or something for my clients, you know, something that I've always had in the back of my mind, but it's just something that it's too far in the future for my ADHD brain to wrap around. I'm gonna have to get my OBM team to help me get that off the ground. But she's now an incredible hypnotherapist, and she's also a yoga instructor. We could absolutely get together and collaborate on me running a retreat and bringing her in for a couple experiences. Okay, I'll use Jason. And Jason. What are you saying? Currently chatting with the Wolman Ice rink about when they open. No bitch laughing for me. Okay. I hope. I hope they have good news for you, because I know you have your heart set on that. But, for instance, save Jason. This will never happen, Jason, because I don't like walking uphill in general. I'm not walking up a mountain. But say there is, like, a business building collaboration that Jason and I did where, I don't know, I'm helping people build their businesses as they're climbing Mount Kilimanjaro. Probably not the best collaborative idea, but you see what I mean here? It's not creating a business together. It's creating an event or an experience together. You know, likewise, you could do some kind of collaboration where someone comes in and does something for your clients, or you do some kind of, like, standalone offering. Totally cool. But what is required in that scenario is that both people have a distinguishable brand with a distinguishable audience that they get to bring to the table that are complimentary. It's really hard to design a partnership when two people are offering a service when there's not that distinction of this person brings this and this person brings that and these are the audiences that they bring to the table. Okay. Those audiences don't actually have to be even. Like, if one person has a hundred thousand people and another person has 10,000 people, it can actually still work. Say if the 10,000 people person has 10,000, like ideal clients and the hundred thousand person, 100,000 follower person just has like a much bigger network that might not have a more like crystallized ideal client following. Okay, so they're 100 open. On Jason's birth. Jason Rawls is turning. I don't know how old you're turning. He has a birthday the end of October, and he's determined to go ice skating in Central Park. I'm going down to meet him up, meet up with him. And he just found out that the ice rink in Central park is going to be open on his birthday. So super excited. BC Fox. Hello. Oh, my gosh. If you guys don't know, I once picked up a hitchhiker in Philadelphia. I'm not going to tell the embarrassing story, BC Fox, but I made a friend anyway and he's watching the live right now. Anyway, so back to the collaborative talk. So I really want you to get real with yourself and it's okay. I want you to have give yourself full permission here and hide the color key if anyone ever wants their colors done. The color key is absolutely incredible. I actually had my colors done. This is a complete aside, by the way. I had my colors done and I actually changed the color branding for my business because I figured it would be so much easier for me and complimentary to me if I just change my branding to be my colors. So that way, anytime I got dressed in my colors, I'd also be on brand. Okay. Just a clever little hack there so I wouldn't have to have like two different wardrobes. The color key. Thanks, Katie. Also, I have to tell you guys, I don't know if I ever told you this. Going shopping with my phone. I'm talking to my phone. I was going to show you going shopping with like the color key report on your phone and just handing it to the sales lady at the clothing store is so much easier than going and trying to find it on your own because. And it makes it fun for them. It's like a scavenger hunt. They know all the things and they're able to go and just pull a bunch of stuff for you and it's so dangerous. You end up spending so much money. But if you want to get your colors done, highly recommend it. And I highly recommend the color key. If they're taking any more clients and they are following me, they are commenting on the live here in Instagram and they are on Instagram. So if you're watching somewhere else, you can go and check them out there. Anyway, just a little break for a commercial. Anyway, back to our normal programming, everyone. So if you are starting a partnership and you want to start a business out of it, okay, I want you to just pause, cool, cool your heels and just have a real conversation about is this something that we need to start as a business or can this be a collaboration? Okay, Nothing wrong with either one. And let me tell you, it's way easier to protect the friendship and that partnership outside of the business context if you're honest from the get go. Because the worst, the last thing you want to happen is like this whole relationship goes south because you were both feeling insecure about doing something on your own, so you did something together and then it worked out and then you start blaming each other and there's resentment, blah, blah, blah. Just get clear from the get go. Okay? That is my number one piece of advice there. Lastly, you know, partnerships, I know they feel like marriages, but marriages are, are literally till death to you part. Like, that's the goal. The goal with a marriage is not to be with each other for like five years and then separate, right? The goal of a marriage is like, hopefully we die together, okay? Or we die like one of us dies and then that's that. Okay? Businesses are not the same thing, okay? Like typically you're not going to be working in your business until the day you die, okay? Hopefully you have some time to relax and retire at the end. Hopefully if you make enough money and you're successful enough. But you also want to think about, like, there may be a time where you want to like switch jobs, you want to move on to another project. And you know, if that's the case and this partnership is still growing strong and this business is still like running along. You want to make sure from go that you have the terms of exit laid out in a partnership agreement. Okay, I know this is not a sexy conversation to have when you're starting a partnership with someone. It's the last thing that you want to get into. It's like planning the divorce. It's like doing like a prenup on steroids because you're not just planning what you get. And What I get, you're planning exactly how you're going to get divorced. Okay. My friend David Fryman, who is also now a business partner of mine, we have something very exciting coming down the pipes. He is a litigation attorney out of New York and he works on business divorces all the time. Okay. He can, he sees how painful they are. He will tell you that it is so much easier to exit when you already had the preemptive conversation about what that's going to go like. Okay? Because I want you to think about it like if you've started a business with someone and you're both running this business, the income that's coming in from the business is, is paying out to both of you, right? So if one of you then starts the conversation without any preamble or any pre conversation and planning around, I think I want to exit. I want you to imagine just human nature here. The other person not understanding what could happen is going to start moving into panic mode, okay. And may not be the normal, like even keel supportive kind of human that you're used to working with because they're afraid for their livelihood. Okay? Real situation that happens all the time with business owners. The best thing you can do for this, you know, potential ultimate situation that will arise in your business is to plan out what the exit might be. You know, can that person sell shares to someone else? Can they sell to that one person? Blah, blah. Like do they want to exit and have like an employee rise up for to take over the responsibility, responsibilities and then proceeds still go to that person, whatever. You want to have all of those details laid out, you know, Also you want to consider if one person wants to leave the partnership, does the business still exist? Okay, you really want to get into all those details. There is nothing worse than losing a friendship along with a business partnership. And planning that ahead of time is one of the kindest things you're going to do if a little uncomfortable. Jason Rawls. Oh, color key. The best biz hack. Thank you. Thought of it myself. Jason Rawls. I've never considered terms of exit. What a superb consideration. Well, thank you very much. I won't take full credit for that. That is a David Fryman thing. The man knows his stuff And. Hi, John. Welcome. Anyway, it is Friday afternoon everyone. I have a little bit more work to do before we wrap up the week tonight. Just a little personal note. So our neighbor across the street and my family's place on the Cape, her dog and my parents dog have birthdays very close to each other. So we always have a birthday party for each one of them and we're having them over for a dog's birthday tonight because, you know, we're just. We're dog people. I know they're dog people, but then they're dog people and we're dog people. Okay, Jason, you have. You said it. And thanks, David too. Thank you. I'm gonna tell David. I'm gonna start taking credit for that. Justin, Liam's best saying I've heard and I'm gonna just share this. The best saying I've heard in relation to business and friendships or family is the quote from the Pirates of the Caribbean. Nothing personal, Jack, just good business. It's a good day when someone is able to quote Pirates of the Caribbean in one of my lives. I'm here for it, Justin. Thank you. Anyway, I hope you all found this super helpful. If you're thinking about starting a business partnership, come back to this. Revisit it. If you want a business strategist, you know, like point of view of what the idea is and you want me to poke holes in it and tell you what the opportunities are, I'm more than happy to get on the phone with you. Also, if you are wanting to do the like formal partnership agreement and you need a lawyer to do that, I highly recommend David Fryman. Justin Liams, but you have heard of me. Lol. Lol. Lol. Oh my gosh. Yes. I'm gonna have to watch that tonight. Thanks, Justin. Anyway, but other than that, I hope you all have had an incredible week. I hope you have an amazing weekend and I will be live with you I think probably over the weekend and also next week because I have some work I'm procrastinating doing. Going live is a great way to progress. Procrastinate. Anyway, thank you all for joining. I want to say hi to Jason and John and the color key and B.C. fox and Jessica and Rob Rush and Andrew and Justin and we're not thinking that guy who cold pitched me in my own comments. No siree. Anyway, I'm Katie McManus, business strategist and money mindset coach for ADHD business owners. Thank you all for joining. I will see you all soon and have an amazing night. Bye.