AP 0245: How Do You Manage Business Partnerships?

AskPat 245 Episode Transcript

Pat Flynn: What's up everybody? Pay Flynn here and welcome to Episode 245 of AskPat, the final three episodes here of 2015.

I hope you're having a great week, hope you've had a great holiday. My family and I, we're doing well. And I'm not going to waste any of your time. Let's get right to this. Before we get to today's question from Anne, just a fantastic question actually and really on the top of my mind right now, I want to thank today's sponsor, which is FreshBooks.com.

They've been one of the original sponsors of AskPat. And I thank them so much for their support for the show, and also for entrepreneurs out there who are trying to make things work and keep their finances organized because they are the easiest to use cloud accounting solution to help you keep track of your finances. Money coming in, money going out. If you have anybody that you're billing or invoicing, it just makes it incredibly easy and professional-looking, so you can focus more on what you need to do as a business owner, instead of fumbling around with all the accounting stuff like I did when I first started and I used Excel to try to organize everything. So, don't do like I did. Use FreshBooks. Go ahead and go to GetFreshBooks.com and enter “AskPat” in the “How did you hear about us” section to get a seven-day free trial. Check that out.

Awesome. Let's get to today's question from Anne.

Anne: Hey Pat. It's Anne here. Thanks for all that you do. I just had a quick question for you. I am so inspired by the teamwork I see you doing with Chris Ducker and others. I'm curious, though. I know that money exchanges hands, but I want to know what that process looks like. I've got several friends that I would like to work with, and I want to make sure that we treat each other fairly for our professional skills that we both contribute to a project. Thanks for your help.

Pat Flynn: Hey Anne. Thank you so much for the question, and a happy New Year to you and your family. I love this question, and like I said before, it's at the top of my mind right now because Chris Ducker and I are working on something big. You can find out about that at 1DayBB.com. I also have a number of other people in this world who I've been working with in the past and will be working with in the future to provide new value to the audience I have as well. And it's just really exciting because when you understand the power of working with other people, the fact that two heads are always better than one especially when you consider that they're not necessarily competitors, but perhaps people that can work with you and you can work with them to better serve both of your audiences or combine audiences for different offers and things like that. I mean, the sky is the limit, really. And if you think that you can do all this yourself or you can grow as big as you can on your own, you're kidding yourself. There's a lot of people out there who could add value to you and your audience, and you could provide value to them and their audience as well.

And so, that's how I approach it. That's how I feel about working with other people. I look for opportunities to do that. Although, I will say that now that I've become a little bit popular in this space, a lot of people are emailing me who I don't know who are offering to partner with me or become an affiliate for their products. And that's a little scary because a lot of those offers are very, very attractive and you just gotta watch out. When you start doing this a lot and you start to become popular and people know that you're starting to work with other people, a lot people are going to try to take advantage of you and the audience that you've built and the the trust that you've earned with your audience.

And so, I have a simple rule, before I get to specifically to answering your question, Anne, I have a specific rule for me that makes it easy for me to decide whether or not I should work with somebody. A, do I know them and do I trust them? That's kinda the first thing. If I don't know them, then does anybody else I know trust them or have used their product as well? It takes a little bit of convincing for me to actually use a product before I ended up recommending it to my audience. And that's the number one rule for me, which is, I can't recommend something I haven't used before. And at which point people usually say, “Oh, I'll give you a free trial for this” or “I'll let you try it out for seven days” or whatever. And I usually say, “Well, I'm not looking to get involved with something like this.” But if it is, and if it's something I've needed a solution for, then I will explore it. And every once in a while, those things are a hit.

So, that's how I kinda approach it. But typically I like to start with if I know there's somebody else out there who has, maybe, a product or a skill or something they can share with my audience, I'd want them to offer that to my audience. And there would be money exchange. There would be some sort of deal that would happen between myself and another person. Sometimes you'll hear this word called “JV” or “joint venture” thrown around. And that's essentially what it is when you work with somebody else to create a specific offer for a particular audience and there's going to be money exchange. And they money could be exchanged in many different ways in terms of if, maybe, it's an affiliate relationship. Maybe it's an exclusive affiliate relationship, where someone is just working with you and nobody else at the same time, which can have its own benefits, of course. Maybe there's a special rate at which you give a particular person because you have a great relationship with them.

And that's where I would start. I would start with the people who you know that can provide value to your audience. Don't just kinda reach out to somebody cold; start with your existing network. And Anne, it sounds like you already have people in mind. And of course you want to keep those relationships great moving forward. I know a lot of people who have gotten into business with each other. Two of my really great friends, actually, had gone into business together, and they are no longer friends. And we don't want that to happen. You know, you're friends beforehand, you don't want business and money to get in the way, but you do need to talk about it. And that's the big thing. When you have a potential joint venture partnership with somebody, when you are going into business with somebody else, whether it's just sort of a one-time offer or for good with somebody, you want to make sure you talk it out and you think about all of the scenarios. And you want to make sure just that everybody's happy and fair.

And this is your moment to speak up and talk your mind without being afraid of what the other person will think. And you have to do the same thing, too. It's only best that you are completely honest and upfront, and you tell the person on the other end that you want them to be honest and upfront, too. More often than not, you guys will come to some sort of an agreement based on the skills and based on the audience size and things like that and what's being offered. A lot of people go so detailed enough to create spreadsheets based on, you know, and create calculations and algorithms to create specific percentages and numbers. Just so the numbers are the driving force and not necessarily feelings and some people go that route.

Again, you'll have to talk it out. It's going to be different with everybody. Somebody who you might want to work with might be a numbers person, whereas another person might just want to continue to build a relationship with you and will give you an amazing deal and will actually do things for you for free sometimes, knowing that down the road you're going to do something back for them, sort of pro bono status. It's hard to give you an exact answer and in terms of how compensation should happen. Because it's going to be different for every person that you connect with. But I would just make sure that both parties are always going to be honest and upfront with each other, and that you get things in writing and figure it out beforehand. I know too many people . . . This was me when I first started: I just would find somebody who could provide value to my audience in one way, shape, or form, had a product that would fit perfectly with my audience, and I would just say, “Hey, let's work together.” “Okay, let's do it.” And then I'd start selling their product and then eventually we then have that discussion. You know, “I've sold this many for you. How much did I get?” I mean, this is really rookie stuff.

And this was where both sides didn't really know what they were doing. And that can be dangerous. And luckily, those people that I was working with before . . . this was back in GreenExamAcademy.com with my LEED exam site, back in those days. It still exists, so that partnership is definitely solid now. We just learned over time and we both knew where each other was coming from. We were both sort of new to the industry and didn't really know what we were doing. But we figured things out along the way and we talked it out. And it wasn't until we talked it out and figured out an agreement that we were both comfortable with where things were. Want to make sure you talk out all the details, all the numbers. If this happens and if that happens, all those sorts of things.

And if you are doing a JV, it might seem less formal than getting into an actual business partnership with someone, which is obviously true. It's less formal than that, however you still want to keep it formal and still want to keep it very strict and have paperwork involved. Because that's how you know that things are supposed to be a certain way. And then when something happens, you don't have to try and figure it out. Then it's kind of already been figured out. And it's hard to know exactly what all those scenarios will be. You kinda have to talk it out. And I would definitely recommend getting on Skype together. Or if you're in-person, have lunch together and talk it out. Although, that's not always possible, that's going to be the best case scenario. And just be flexible because you're not going to always know the right thing to do and neither will the other person. But as long as you both know that, that you're there to help each other and keep each other happy, then you're going to make things work out.

I think for Chris and I, I won't get into specific numbers, but we have been long-time friends and we definitely wanted to make sure that when we are working together for this thing that we have coming up at 1DayBB.com next year, which is like in three days, which is crazy. It's not going to launch on January 1st. You'll see more information about it if you sign up at 1DayBB.com. But we definitely have discussions about the numbers and what happens in certain events. But we both feel we each have our own abilities to bring to the table, skills, and you know, we're friends and we want to keep it that way. So, it's important to have those conversations beforehand. I take that same approach with everybody that I work with. And if it's somebody I don't know, I try to get to know them as well so I understand the person is behind that product, service, tool, or potential recommendation.

So, Anne, I hope that answers your question or at least in some way or part. If any of you out there have any suggestions for Anne or have, perhaps, gone through some hardships or maybe have done very successful work with other partners as well, go ahead and use the #AskPat245 for Episode 245. That's #AskPat245. And in 140 characters or less, give Anne some advice and let's continue this conversation off of AskPat.com. So, #AskPat245. Anne, thank you so much for the question today. An AskPat t-shirt is headed your way. And again, happy New Year to you and to everybody else out there listening. I also want to say that we're still taking questions. So, if you have a question you'd like potentially featured here on the show, just head on over to AskPat.com and, like Anne, you will get a t-shirt sent to your place for free, on us, if you get your question featured here on the show.

And I also want to thank FreshBooks.com, the accounting software that millions of small businesses are using to help track of their finances and create invoices and to make things super easy, come tax season, which is right around the corner for those of you who don't know. And they have a mobile, actually an award-winning mobile app, so that you can check your finances on the go as well. If you'd like to get a seven-day free trial of FreshBooks, head on over to GetFreshBooks.com and enter “AskPat” in the “How did you hear about us” section. Again, that's GetFreshBooks.com and enter “AskPat.”

Thank you so much, and as always, I love to end with a quote. And today's quote is from Zig Ziglar. He says, “A goal properly set is halfway reached.” Love that. Setting those goals. So important. “A goal properly set is halfway reached.”

Alright. Let's keep moving forward here as we approach 2015. Love you guys, and I'll see you in the next episode of AskPat.