It’s never been more important to watch your money. It is not the time for careless mistakes.
The last time we faced an economic crisis like this, I made a bad mistake.
The $150K Mistake
I was in the middle of a partnership dissolution when the company didn’t get an expected payment. The agreement had been that my company would get approximately $25,000 every quarter for the next 6 quarters.
It was 2007 and things were falling apart already, but right now I was more focused on that income stream. I was surprised when the payment didn’t show up because the buyer had always been so prompt.
I called, asking where the check was.
The buyer was surprised and said, “Well, don’t you remember what the new contract said?”
He sent it over and I was shocked.
Without my knowledge, my soon-to-be former partner had signed over all the payments. I asked him and he denied signing it. That start an expensive and nasty court battle.
In the end, we even went to the effort and expense to get a handwriting expert. And I had to apologize.
Yep, he had signed the document. The asset was gone.
Are you surprised to know that I was glad?
Happy that we had the right kind of LLC so that all I could lose was the assets of the company. If we had set up something different, I could have lost everything I owned too.
Is a Partner Worth the Risk?
Is a partner worth the risk? In the right circumstances, yes.
Never partner with a person you could hire. Don’t partner for friendship. Never partner because it’s cheap or easy.
A partnership should mean the whole is greater than the sum of the parts. Partner for growth, for something better than you can do separately.
Makin’ Money & Havin’ Fun
Good Partner, Good Deal: Makin’ Money & Having Fun
Good Partner, Bad Deal: Fix it
Bad Partner, Good Deal: Failure
Bad Partner, Bad Deal: RUN!
Even with the best partner and the best deal, you’ve got to make sure you’ve got the right agreements signed and sealed first.
And you have to make sure you’ve got the right type of partnership/LLC. The wrong one can cost you everything.
Avoid This New Pit of Despair
As bad as all that is, there is a worse problem. Every week I see people fall into this trap.
It’s the “joint venture”. You have an idea and someone else has an idea and two ideas are better than one. So, put it together and try out a project.
It’s just a test so you don’t want to put the time and energy into forming a company.
STOP right there.
That’s a GIANT mistake.
Unless you form a company, you have a general partnership and that means every single thing your partner does can cost you. Not just signing away a stream of income like what happened to me, but actually mean you lose your house, your savings account, you kid’s education fund, EVERYTHING.
Answer These Two Questions FIRST Before You Get a Partner
#1 Do you really need a partner? These are the questions you need to ask yourself and your partner.
#2 Do you have the right business structure? Here’s what you need to know.
That’s what we’ll talk about Wednesday in our coaching class. It’s the 3rd Wednesday of the month and that means we’ll cover a business topic at 5 pm Pacific. You’ll get a Home Study Course AND we’ll cover the topic live. I’ll take your questions and we’ll have a conversation about this and whatever else is on your mind.
The 4th Wednesday is the last in the Fundamental module for Sustainable Digital Empires. The full manual and all 10 lessons will be packaged together and given to all current coaching members within the next 4-6 weeks.
And then in August we’ll start on the next Sustainable Digital Empires module.
If you’re not yet a member, there is still time to sign up to get the real estate and business home study courses PLUS the Sustainable Digital Empires course.