This Podcast Is Episode Number 429, And It's About The Challenges Of Construction Business Partnership Randalism: A Partnership is the only ship designed to sink. However, we understand your preference, so I would like to talk about it in this blog post. Joint ventures are a bit like change orders. They can be an incredible opportunity to make or lose much money very quickly. Almost as quick as betting money on a roulette wheel in a casino. Joint Ventures have their own accounting rules. The devil is in the details. How costs and profits are shared among the participants depends on how the joint venture is structured and the terms of the agreement. Contractors with annual sales of less than $10,000,000 often get together to work on a specific project. They find a friendly competitor to supply labor and equipment for a percentage of the job, hourly fee, or a flat number. This could technically be a "Joint Venture"; however, the time and scope are generally short and sweet. For example, a concrete contractor may have a large project requiring more finishers than on staff. For many business owners, partnerships are an ideal way to run a business. Operating a company with a partner means you don't have to make all the decisions independently. It means you have someone there with you to help you carry the burden and share ideas with. That can be a great thing when it lasts. Unfortunately, many construction business partnerships fail. Although they fall for various reasons, some main factors contribute to a business partnership breakup. Here are three reasons business partners break up and steps you can take to prevent it from happening to you. 1. Unequal contributions All partnerships go through periods where one person contributes—their time, money, energy, or other resources—less than the others. That's normal. When it happens over a prolonged period or becomes a pattern, resentment can set in, and the other partners can begin to feel taken for granted. In some cases, a disparity in contributions is natural. However, these situations require a conversation to ensure that the inequality is addressed and made up for in other ways. For example, if one of the partners has a lot more money or time to invest. If one person has more money to contribute, can the other make it up by contributing more time? If one partner is in a stressful period—maybe they need to step back for a few months due to health issues—can they pick up the slack later so the other partner can take some time off? Make sure this discussion involves quantifiable amounts. You can't measure "work extra," but you can count "work an extra 6 hours a week for three months." Unequal contributions can be addressed and managed, but all partners need to talk about the situation and develop a reasonable and realistic plan for ensuring the disparity doesn't become an insurmountable problem. 2. Not hiring help Partnerships run into trouble when the people involved think they can handle every issue that comes their way, even if it falls outside their area of expertise. It doesn't matter how many people are involved in the partnership; if none of them are good with numbers, none should be doing the accounting. When people take on too many activities outside their expertise, problems arise. Mistakes get made, and people get blamed. Relationships can sour. Discuss with your partners your areas of expertise and activities that you aren't comfortable doing. Any tasks that no one has expertise in should be given to a professional so that each of you can focus on the areas you're good at and comfortable in. 3. Differing visions Business partners should have a shared vision for the company to work towards the same goals. It's okay for partners to have slightly different views on achieving those goals, but overall the vision should be aligned. Problems can take hold when partners have profoundly different visions for the company and meet their goals. Ensuring a...