Anyone Share Profits With a Business Partner?

24 replies
So i've got a friend who I feel would be great at Internet Marketing. He's a business major and just has a truly creative mind when it comes to business and understands marketing concepts and what compels people to buy things.

I feel that as a team we could really team up and make a killing together with a combined mental effort as well as splitting up the tasks between eachother on promoting products and creating content/building backlinks etc...

Anyone ever have a situation like this where you were wanting to partner with someone else? Is this something that's smart to do or would it be best to have him go at it on his own?

Any advice would be greatly appreciated!
#business #partner #profits #share
  • Profile picture of the author matthewd
    I have a partner on one of my biggest sites and we have another big project in the works.

    I am also teaming up with one of my customers that emailed me with some great ideas.

    When both parties can bring different skillsets to the table, a partnership is amazing.

    There has to be a lot of trust between the two of you. Also, since it is one of your buddies, you need to be extra careful about it. If one of you is not pulling your weight it IS going to frustrate the other one and it will not only weigh on the business relationship but on your friendship too.

    With that warning out of the way, I LOVE partnerships. I am 100% positive that I make more money splitting the profits with a partner than I would if I were to do it on my own.
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    • Originally Posted by matthewd View Post

      I have a partner on one of my biggest sites and we have another big project in the works.

      I am also teaming up with one of my customers that emailed me with some great ideas.

      When both parties can bring different skillsets to the table, a partnership is amazing.

      There has to be a lot of trust between the two of you. Also, since it is one of your buddies, you need to be extra careful about it. If one of you is not pulling your weight it IS going to frustrate the other one and it will not only weigh on the business relationship but on your friendship too.

      With that warning out of the way, I LOVE partnerships. I am 100% positive that I make more money splitting the profits with a partner than I would if I were to do it on my own.
      Yeah you make a good point. I wouldn't want to ruin the friendship over business.... i'm thinking maybe partnering up on individual projects may be the best thing.

      For example: Having one clickbank account that we are using to promote 1 product as a team. Or having one website/product that we are both promoting, but keeping the rest of our business separate from eachother.

      Thanks for your response!
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  • Profile picture of the author Ron Douglas
    Never ever EVER partner with anyone on a company. Partnerships are like marriages - eventually they fall apart and end up in an ugly split of assets and ill will amongst former friends.

    It starts out great, but eventually one partner starts to feel like the other is not contributing as much to the company. BUT, you can't just pack up and leave. You have to either agree to sell the company or one partner has to buy the other out. If you can agree to that - hooray, tip back a glass, you're lucky.

    But what happens when one partner wants out and the other doesn't? It becomes a deadlock. The deadbeat partner can keep it at a stalemate and refuse to sell the company or agree to a buyout. He can really just sit back, let you do all the work and collect half the money.

    And, to make matters worse, now you're considered an expert in your market but you can't use your expert status to build anything new on your own because you deadbeat partner can threaten to sue you for competing with or stealing opportunities from the company.

    In a deadlock situation like this with a deadbeat jerk backstabbing partner, the only thing you can do at that point is pay a lawyer, have the company dissolved in court, and start over. The company will then be liquidated and sold to the highest bidder. You'll lose lots of money, but it will be worth it to get rid of the loser and start over.

    Don't think that this can't happen to you. It doesn't matter how cool your friend is, relationships fall apart.

    My advice is to only partner on individual projects and form your own company individually.

    And make sure you have a prenup, or err a solid agreement in place for the project. Spending time on this up front will save you a lot of frustration down the line.
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    • Originally Posted by Ron Douglas View Post

      Never ever EVER partner with anyone on a company. Partnerships are like marriages - eventually they fall apart and end up in an ugly split of assets and ill will amongst former friends.

      It starts out great, but eventually one partner starts to feel like the other is not contributing as much to the company. BUT, you can't just pack up and leave. You have to either agree to sell the company or one partner has to buy the other out. If you can agree to that - hooray, tip back a glass, you're lucky.

      But what happens when one partner wants out and the other doesn't? It becomes a deadlock. The deadbeat partner can keep it at a stalemate and refuse to sell the company or agree to a buyout. He can really just sit back, let you do all the work and collect half the money.

      And, to make matters worse, now you're considered an expert in your market but you can't use your expert status to build anything new on your own because you deadbeat partner can threaten to sue you for competing with or stealing opportunities from the company.

      In a deadlock situation like this with a deadbeat jerk backstabbing partner, the only thing you can do at that point is pay a lawyer, have the company dissolved in court, and start over. The company will then be liquidated and sold to the highest bidder. You'll lose lots of money, but it will be worth it to get rid of the loser and start over.

      Don't think that this can't happen to you. It doesn't matter how cool your friend is, relationships fall apart.

      My advice is to only partner on individual projects and form your own company individually.

      And make sure you have a prenup, or err an solid agreement in place for the project. Spending time on this up front will save you a lot of frustration down the line.
      Ron I sure hope this is hypothetical and hasn't actually happened to you! That would be horrible.

      This really does open my eyes to what could happen. I know just like a marriage you can easily think that this will never happen to you because you know the other person so well... but money can change people and if there was any significant amount of money involved that can potentially bring out the worst in someone.

      I think i'm going to be taking your guys advice and only partnering on individual projects so that I can keep my business separate and safe.

      Thanks so much for your opinion!
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    • Profile picture of the author mdunn123
      Originally Posted by Ron Douglas View Post

      Never ever EVER partner with anyone on a company. Partnerships are like marriages - eventually they fall apart and end up in an ugly split of assets and ill will amongst former friends.

      It starts out great, but eventually one partner starts to feel like the other is not contributing as much to the company. BUT, you can't just pack up and leave. You have to either agree to sell the company or one partner has to buy the other out. If you can agree to that - hooray, tip back a glass, you're lucky.

      But what happens when one partner wants out and the other doesn't? It becomes a deadlock. The deadbeat partner can keep it at a stalemate and refuse to sell the company or agree to a buyout. He can really just sit back, let you do all the work and collect half the money.

      And, to make matters worse, now you're considered an expert in your market but you can't use your expert status to build anything new on your own because you deadbeat partner can threaten to sue you for competing with or stealing opportunities from the company.

      In a deadlock situation like this with a deadbeat jerk backstabbing partner, the only thing you can do at that point is pay a lawyer, have the company dissolved in court, and start over. The company will then be liquidated and sold to the highest bidder. You'll lose lots of money, but it will be worth it to get rid of the loser and start over.

      Don't think that this can't happen to you. It doesn't matter how cool your friend is, relationships fall apart.

      My advice is to only partner on individual projects and form your own company individually.

      And make sure you have a prenup, or err a solid agreement in place for the project. Spending time on this up front will save you a lot of frustration down the line.
      Ron,

      Would you happen to know how the situation changes if one partner has the majority share like 51% ownership to 49% ownership? Does the partner still have to agree in the same way to sell his part of the company or is it easier to shake him then?
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      • Profile picture of the author Ron Douglas
        Originally Posted by mdunn123 View Post

        Ron,

        Would you happen to know how the situation changes if one partner has the majority share like 51% ownership to 49% ownership? Does the partner still have to agree in the same way to sell his part of the company or is it easier to shake him then?
        It all depends on how the agreement is written up in the beginning. I'm not a lawyer but from my experience, a majority vote of 51% usually holds weight. I've heard of cases when there are 3 partners and two of the three can vote to buy the other partner out for his stake in the company. But, it all comes down to the initial operating agreement for the company.
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        • Profile picture of the author mdunn123
          Originally Posted by Ron Douglas View Post

          It all depends on how the agreement is written up in the beginning. I'm not a lawyer but from my experience, a majority vote of 51% usually holds weight. I've heard of cases when there are 3 partners and two of the three can vote to buy the other partner out for his stake in the company. But, it all comes down to the initial operating agreement for the company.

          Makes sense Ron. Thank you for the response!
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  • Profile picture of the author matthewd
    Wow, Ron, have you had a personal experience with this?

    To clarify, I agree not to partner on a company but rather partner on projects. That's the way I do mine and as I said earlier, I am very pleased with the results.
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  • Profile picture of the author nicholasb
    You could do what I do.

    I have a friend in California who closes my deal out there. I pay him half of the profits then he sends me the rest.
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  • Profile picture of the author slashman
    To cover yourself you should both enter into a contract that allows any problems to have a way of figuring themselves out.I don't think your friend would be mad if you made him sign a contract that allowed you to buy off his half if some disagreements began to ruin the business. You can make it fair and force a sell off in some fair manner.

    Partnerships are tough. From the beginning everyone needs to know what their parts are. That's a good way of avoiding the "I'm doing more than you" problem.

    Thanks,

    George
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    I'm a cool guy.

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  • Profile picture of the author Thomas
    Originally Posted by YoYoPro View Post

    So i've got a friend who I feel would be great at Internet Marketing. He's a business major and just has a truly creative mind when it comes to business and understands marketing concepts and what compels people to buy things.

    I feel that as a team we could really team up and make a killing together with a combined mental effort as well as splitting up the tasks between eachother on promoting products and creating content/building backlinks etc...

    Anyone ever have a situation like this where you were wanting to partner with someone else? Is this something that's smart to do or would it be best to have him go at it on his own?

    Any advice would be greatly appreciated!
    I partnered with a Warrior a few years back ('partnered' meaning collaborated on a web project, not forming a legal partnership). All went well for a few years until he stiffed me for $20k. I sued him and he vanished from the face of the Earth!

    My advice: Only partner with someone within driving range. That way, you can turn up at their door with a baseball bat when things go wrong.

    Tommy.
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  • Profile picture of the author matthewd
    I didn't realize there was so much negativity towards having a partner.

    I think my partnerships are amazing, but maybe I am have just been lucky.
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    • Profile picture of the author Corwinnx
      Having had my share and seen my share of 'partnerships gone bad' yet still believing STRONGLY in the power of masterminds, teams and leverage, my system for forming a partnership got simplified to this:

      1.) Clear and Defined Set of Rules, Responsibilities and Meeting Dates to change, clarify, rewrite, delete or add to any of these.
      2.) Clear and Defined Compensation Plan For each responsibility, job etc, that each partner must perform
      3.) Agreement to deduct any and all compensation amounts equal to the defined compensation plan for any particular responsibily, from partners percentage of the profits should partner fail to perform any of the responsibilities, and Agreement to pay compensation for any excess responsibilities that either partner may have had to take on to complete the project.

      If you want an example:

      Dick and Jane partner of "Project E-book"

      Dick and Jane make a schedule for meeting every Friday to discuss the progression of the project, and include a 2:00PM discussion of the rules and responsibilities to make any necessary adjustments.

      Dicks job is to do the following:
      Write an autoresponder series, $50.00
      Write a report- $50.00
      Write a book- $100.00

      Jane is to do the following:
      Write the sales copy $100.00
      Build the landing page $100.00
      Set up the affiliate program $100.00

      If Dick and Jane each perform their designated tasks, there will be a 50/50 split.

      BUT, if on Wednesday Jane informs Dick that she will be unable to set up the affiliate program, then on Friday, they will discuss Dick taking over that task, or having it outsourced.

      If Dick chooses to take on the task, $100.00 will be deducted from Jane's 50% profit. If they are forced to outsource the task and it costs $200.00, then Jane must pay the $200.00 from her 50% of the profits.

      Of course, if you want a solid, happy and long lasting partnership, I suggest that this method only be employed with regards to 'reason.' Meaning that if Dick and Jane partner on many projects, and both equally contribute their fair share without incident on all of these projects, but an 'unforseen circumstance' only one prevents one or the other from doing their job(s) this 'clause' needn't be and shouldn't be 'executed.'

      I suggest using the 'clause' only when one partner is consistently pulling the entire workload. But having it in the agreement in the first place, can save a large amount grief over the 'who was supposed to do what' arguments later.

      -Marcus
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      • Originally Posted by Corwinnx View Post

        Having had my share and seen my share of 'partnerships gone bad' yet still believing STRONGLY in the power of masterminds, teams and leverage, my system for forming a partnership got simplified to this:

        1.) Clear and Defined Set of Rules, Responsibilities and Meeting Dates to change, clarify, rewrite, delete or add to any of these.
        2.) Clear and Defined Compensation Plan For each responsibility, job etc, that each partner must perform
        3.) Agreement to deduct any and all compensation amounts equal to the defined compensation plan for any particular responsibily, from partners percentage of the profits should partner fail to perform any of the responsibilities, and Agreement to pay compensation for any excess responsibilities that either partner may have had to take on to complete the project.

        If you want an example:

        Dick and Jane partner of "Project E-book"

        Dick and Jane make a schedule for meeting every Friday to discuss the progression of the project, and include a 2:00PM discussion of the rules and responsibilities to make any necessary adjustments.

        Dicks job is to do the following:
        Write an autoresponder series, $50.00
        Write a report- $50.00
        Write a book- $100.00

        Jane is to do the following:
        Write the sales copy $100.00
        Build the landing page $100.00
        Set up the affiliate program $100.00

        If Dick and Jane each perform their designated tasks, there will be a 50/50 split.

        BUT, if on Wednesday Jane informs Dick that she will be unable to set up the affiliate program, then on Friday, they will discuss Dick taking over that task, or having it outsourced.

        If Dick chooses to take on the task, $100.00 will be deducted from Jane's 50% profit. If they are forced to outsource the task and it costs $200.00, then Jane must pay the $200.00 from her 50% of the profits.

        Of course, if you want a solid, happy and long lasting partnership, I suggest that this method only be employed with regards to 'reason.' Meaning that if Dick and Jane partner on many projects, and both equally contribute their fair share without incident on all of these projects, but an 'unforseen circumstance' only one prevents one or the other from doing their job(s) this 'clause' needn't be and shouldn't be 'executed.'

        I suggest using the 'clause' only when one partner is consistently pulling the entire workload. But having it in the agreement in the first place, can save a large amount grief over the 'who was supposed to do what' arguments later.

        -Marcus
        Thanks for your post, it definitely gives me an idea on how we can decide who gets what in the split of profits for any side projects we'd decide to do.

        Still a very big decision.
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  • Profile picture of the author Steve Iser
    Dude, Ron - usually I'd agree with that statement - but like with anything in business, a small group of people pull it off.. and pull it off real well.

    And there's more than enough evidence to support that.

    But on the majority of people, yes - I strongly discourage it. It's easy to see good/bad partnerships in this business.
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  • Profile picture of the author Janet Sawyer
    Don't ever do anything without a signed and written notorised agreement!
    Especially if there is money involved.

    Just my 2c

    I've partnered with warriors here and most are truely amazing in what they do, they stick to the deal and they come through right to the end.
    It's the "warriors friends" you need to be wary of. ( The monekys on their backs - so to speak! )

    Just my 2c
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  • Profile picture of the author Ron Douglas
    Yes, many people do pull it off well - like the Google guys. I think my point more than anything is be aware that things can go wrong. Forming a partnership is a long term committment just like getting married, but most people just sign on the dotted line without understanding how serious a decision it is.

    If you can avoid it and just partner on an individual project, please do. If not, make sure that you have an agreement in place which covers you in case it doesn't work out. Don't try to save money, save time, or cut corners when it comes to this step.
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  • Profile picture of the author ConnorMRR
    I have to agree with Ron on this, as I have seen with my own eyes the affect a partnership can do if it becomes sour.

    This hasn't happened to be personally, but to a relative of mine.

    I won't give the full story, but my relative was doing very well for himself, top name marketer's were members of his, and he became noticed, so much so that a very well known marketer even noticed. They discussed partnering together, joining forces sort of speak, which they did.

    But the real kicker was that his members had to transfer to the new site, his sites had to be closed, and in the process lost a lot of friends. Even to this day he still receives 'nasty' emails because of it, even though his former members got one of the best deals out there by joining the larger site.

    To cut a long story short, after eight months my relative found himself with no enthusiasm and certainly no will to come online anymore, he had to ask for handouts to pay the bills which he hated, and after 8 months of frustration of not seeing the promises that were made come to fruition he had to tell the guru that was that.

    To this day he now works offline and has no plans to come back.

    After seeing what happened with my brother in law I don't think I will ever consider partnering with anyone

    But I guess this is just one negative partnership, and probably the only partnership that I have witnessed. I am sure there are many successful partnerships out there.

    Connor
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    Still Going Strong Since 2006!
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  • Profile picture of the author Pete Egeler
    I have the perfect partnership!

    I make the money, my wife spends it.

    Well, at least SHE calls it perfect.

    Pete
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  • Profile picture of the author Richard Tunnah
    I'd advise to proceed very carefully and make sure each partner knows what each other will be doing. I have a partner for one of my businesses that after 11 years working together is more a good friend. However I've had a few that just didn't work and one that ran off with my $100k in the company...never to be seen again. He was a respectable local businessman.

    Rich
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  • Profile picture of the author RenaissanceMan
    I do it and it works great!

    we both understand what it takes and honestly it works better then working alone because we both directly understand that what we add to the partnership influences the outcome of our pay at the end of the month.

    do it if you TRUST the person

    trust is key!
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    • Profile picture of the author Karen Keyes
      Recently I met another Warrior and we're buddying up to create a WSO. I don't think either of us really sees the need for any legal documentation or nda, etc. We just broke down the tasks we will take on and what we'll outsource. We're splitting the outsourcing fees 50/50.

      Sometimes things don't need to be as complicated as some people portray them to be. But I suppose if I were to advise someone in this area, I would encourage them to do it carefully and to set up appropriate measures to ensure that everything goes smoothly. But I'm not in the business of advising on partnerships

      Really, I'm excited to work with Dana (the Warrior I met). I think down the road we might want to employ a more structured partnership but for now, we're just working on getting our first product out to see how it goes. The potential is there to expand but we're not diving in head first either.
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  • Profile picture of the author sparrow
    Partnership only work if your partner holds up their end, I have yet to find one that has

    Ed
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    • Profile picture of the author DanGTD
      Regarding taking a partner.

      First think hard and long, then don't.
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