November 21, 2023 • 25 mins
Partnerships are like aircraft. The only ones you hear about are the ones that crash. I keep telling business owners this because when I say to them that getting into a partnership or combining their business with someone else may be a way to grow their business or exit their business, they tell me “I'm not getting into a partnership, they don't work.”
Partnerships can work if you go about things the right way. I know that because I was in a very successful partnership some years ago and this podcast is an interview with the partner I had at the time. We discuss why our partnership worked and how you can make a partnership work for you.
A partnership can be a great way of growing a business and selling it. It can also be a good way to transition out of a business and sell it over time to the partner.
You need to do some work upfront and get to know each other and choose the right partner. Then there are some fundamental things that we recommend you do to help the partnership be successful so listen to my former business partner and very good friend Peter Bangle from Investors In People as we discuss how to have a successful partnership.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Well , welcome everyone to another episode in
the Business Ready for Salepodcast series today. It's my
great pleasure to have a verygood friend and former business
partner with me, Mr. PeterBangal , from Investors and
People. Good day , Peter.
Speaker 2 (00:25):
Good day . John, how are you today?
Speaker 1 (00:28):
I'm excellent.
Excellent. Every day aboveground is a good day. How's the
life down the southwest of wa?
Speaker 2 (00:34):
Well , uh, as you know, John, we're living the
dream down here. Uh, it's abeautiful day today . Um, got
up this morning, went down tothe ocean with a dog, and , uh,
had a run on a swim. Uh ,started a day off of a bit of
bit of health and fitness and ,uh, yeah, couple of , uh,
interviews , um, with , uh,people I'm working with in Hong
Kong and us and , uh, now readyfor you . So ,
Speaker 1 (00:57):
. Okay. It's
great. The , the reason , um, I
wanted to do this podcast onpartnerships is because I get
to talk to a lot of businessowners these days and clients
who are working towards sellingtheir business or getting out
of their business or justgrowing their business. And
(01:18):
whenever I mention getting intoa partnership to them as a way
of achieving their goals, theyfreak out basically and say, no
, no partnerships don't work.
And just a little bit ofbackground about how Peter and
I got to be in a partnership.
So I had a training anddevelopment business called
Leadership Management inAustralia that was part of a
(01:38):
franchise. Peter came in fromthe UK and bought one of the
other franchise seedsbusinesses, which was a very
similar size to mine. I'd beenin business about seven years
at that time, coming up forseven years. And Peter came to
me and he said, like , I've gottwo goals, and you can correct
me if I get this wrong, Peter, but you , you came and
(01:58):
said, I've got two goals. Iwant to get my permanent
residency so I can stay hereand I want to exit the business
in three years and sell and getout. Why don't we put our two
businesses together? Andbecause I'd been in the
business for between six andseven years at that point. And
I loved the business, I lovedthe clients, I loved what we
(02:19):
did. We got some fantasticresults, but I was looking for
a change. And so Peter and I ,uh, checked each other out. Um
, I don't mean policeclearances and all that sort of
stuff. We checked each otherout as personalities and
whether we could work togetherand agreed we got the franchise
or to agree to put the twofranchises together and we got
(02:41):
into a partnership. Um,anything you wanna add to that,
Peter?
Speaker 2 (02:46):
Well, you know, it was a very successful
partnership, John , and weactually achieved our goal ,
um, in about two years andeight months, which was , uh,
which was fantastic. And Ithink when I, when I look back
, um, you know, I, I realizedwhen I started that franchise
that , uh, I didn't have allthe skills I really needed to
make it very successful. Um,and when I met with you and I
(03:09):
watched the way you operate,you know , I haven't met you at
conferences , uh, that thefranchise offered and then met
you in Perth and we talked afew strings . I thought, well,
this gentleman knows how to runthe franchise. He's, he's, he's
, uh, he's the , the bee'sknees at running the franchise
and all the things that goalong with it, which I'm not.
And if he could do that and Icould go out and develop our
business, which is one of mystrengths, I just figured we
(03:31):
could make a bigger businessthan the two we had. And also
we could, you know, probablymake the business ready for
sale. And , and , uh, that'swhat we did.
Speaker 1 (03:39):
Yeah, we , we came up with the mantra Exit with
equity in three years. Mm-Hmm .
So, and , and that's the thing.
If we look at why somepartnerships work, we had a
common goal, and that was toexit with equity in three
years.
Speaker 2 (03:57):
We did. And , and the great thing wa was John , I
, I , I think we exceeded ourexpectations that if you look
at the value of our business,when , when we started to, when
we sold, I reckon, you know, weprobably increased the value by
about 10 times , uh, just byworking together.
Speaker 1 (04:12):
Yeah, absolutely. It was , um, and we , even
though we were differentpersonalities and different
skill sets , we had one of thethings, and it came out in one
of the franchisors trainingsessions, if you remember, we
had very similar values. We did. And that's critical, I think,
(04:33):
in a partnership.
Speaker 2 (04:34):
Yeah. Very , very, very much so because, you know,
the , any, any partnership isinevitably a relationship, and
relationships are built ontrust and mutual respect. And
the under thing that underpinstrust and mutual respect is, is
having good values. So yeah. II couldn't agree more.
Speaker 1 (04:51):
Yeah, I remember that exercise that we did where
the , I mean, I can't rememberhow many people were in the
room, probably 60 or 70 or so,and we all did the values
exercise, and then the guyrunning the session said, now
find , go around the room andfind somebody, or find other
people that have got verysimilar values to you. And, and
you and I, I ended up findingeach other, which I thought was
(05:14):
uncanny . Really ?
Speaker 2 (05:16):
Yes. It was almost as if it was men . And , uh,
and the , and the more wetalked, not only did we realize
we had the same values, but werealized we had , um, diverse ,
uh, skills , uh, uh, that would, uh, be , would be
complimentary in a partnership.
Speaker 1 (05:31):
Absolutely. It was , um, appreciating the
differences, I think, and a , abusiness needs those different
skills. When people get intopartnership with people who are
the same as them, that's whenit can become a problem, I
think. What do you say ?
Speaker 2 (05:48):
Yeah, indeed , indeed . You know, I mean, when
you're starting any , any , anybusiness venture , you're
making any big decisions inbusiness or life, you really
need to have a purpose and anoutcome and a process. Um, and
so, you know, if you , if yousit out with , uh, with , with
checking out the purpose and ,and , and the , uh, the
outcome, you know , uh, uh, for, for us, there was an
(06:09):
opportunity where we could getsynergy through our diverse
skills. Uh, you know, and wecould make two plus two equal
five, or in this case actually10. Um, and, and we could , uh,
work harmonious togetherbecause we would've distinct
roles and responsibilities. Ithink that came to us very
early in the, in ourrelationship, John .
Speaker 1 (06:28):
Yeah. Yeah. Talk a bit more about roles and
responsibilities. How do you,when you get into partnership
with somebody, how do you workout who's doing what?
Speaker 2 (06:39):
Well, it's , it's rather like, you know, if you
were interviewing someone for a, for a job, you know, you ,
you , you look, you know, the,the , uh, capability is made up
of , of knowledge and , andskill and attitude. And so you,
you search into a person'sbackground, like you would look
reading a CV and see whatthey've done, how they've
operated, what successesthey've had, what, what
(07:00):
failures they may have had ,uh, and, and , and get to
understand what , what madethem strong and what , what
made them win. And once youstart to understand people's
strengths, you can comparethose strengths of yours. Uh ,
and then you can look at eachother's weaknesses and , and
you can recognize that if, ifyour strengths equal, my
weaknesses and my weaknessesare are built on, on , on the
(07:21):
strengths of , of , of you,then , um, you know, we've got
a very good , uh, partnershipto it together.
Speaker 1 (07:27):
Yeah. I know as part of your business now, you help
businesses recruit people, and, um, you know, tell us a
little bit about the processyou go through there.
Speaker 2 (07:41):
Yeah, so look, you know , um, our business today,
we we're a managementconsultancy. Um, uh, about half
of our work is in leadershipcoaching. We work with major
oil companies and miners , andalso some small companies. And
we do recruitment for a , asmall to medium enterprises.
And, and , uh, our recruitmentprocess is always very, very
(08:01):
robust. Um, there , there wouldalways be , uh, you know ,
beginning with a , with a cv asmost things do, and, and early
meetings and questions , um,and, and, and building a
relationship so that you canget to know a person, you know,
quite , quite often. Um,there's the two major aspects
(08:22):
of, of, of how recruitmentworks is, is someone eligible?
Do they have the skills andexperience and are they
suitable? Uh, you know, willthey fit in with the business
and the people? So you arealways looking at eligibility
and suitability when you'rerecruiting people. And same for
a partnership. Eligibility inexperience, complimentary
skills, and suitability. How dowe get on together? Do we , can
(08:45):
we, do we have similar values?
Can we build trust and respect?
You know, can we work , can weidentify each other's strengths
and, and allocate roles andresponsibilities that are
suitable to each other? Thoseare the questions you ask , uh,
in a partnership, but they'rethe same questions that you ask
when I'm recruiting is, is aperson gonna fit in that
company? Do I know the teamwell enough? Will they work
(09:07):
with for the boss? Will theboss's method of leadership
apply to that person and getthe best out of them ? What are
those things that , you know,are both on the suitability
side and the eligibility side?
Speaker 1 (09:19):
Yeah, it's , um, that suitability, I've never,
that's a really nice way ofputting it. Eligibility and
suitability. It's gettingpeople to, that will fit your
culture. But I guess when youget into a partnership, same
thing I'll talk about, I'll askyou about , um, starting the
process of getting into apartnership in a sec, but I
(09:41):
just wanna , while we'rerecently talked about
appreciating differences anddifferent personalities , uh, I
wanna tell the story about theday that you came into the
office around 10 o'clock timewith a egg and bacon sonny in
your hand, and then , and well, two and two cups of coffee.
Do you remember? I do. And youand I was sitting on the
(10:03):
computer 'cause that's what Iloved doing. And , um, and you
sat down and you said, Ibrought her some, some
breakfast, egg and bacon soni acup of coffee. And I thought,
Hmm , okay, I wonder what'scoming here. And then , uh, as
we're eating away and drinkingaway, he said, there's
something I want to talk to youabout. And I thought, oh , I ,
here we go. We're gonna get tothe bottom line now. And , uh,
(10:27):
and then you said, now I don'twant an answer and I don't want
you to comment. We'll talkabout it again tomorrow, but
I'm gonna tell you what I'vedone. All right . And I'm
thinking, yeah. Okay. And , um,just for the listeners
information being part of afranchise, we had a suite of
programs that we sold and yousaid, I've just sold a customer
(10:51):
service training program to x,y , Z company. And it was quite
a reasonably large Perth basedcompany. And I freaked out
'cause we didn't have acustomer service program that
we sold. And , um, and Istarted to freak out and you
said, look, I told you I don'twant any response, any answer
now, we'll sit down and we'lltalk about it tomorrow. And ,
(11:15):
um, 'cause you knew, again,it's understanding and
appreciating those differences.
And I think that story makesthe point that you knew what my
response would be. And so youprepared me for it. You
softened me up with a egg andbacon sounding and a cup of
coffee. Um, but said, becauseyou knew that I'm a Muller , I
(11:37):
like to mold things overengineer my training. I need
data and facts. So when youpresented me with, I've just
sold customer service trainingto x, y , Z company, you knew
that given 24 hours, I'dprobably think it through and
think, oh, okay, well I couldcome up with a solution for
that and we'd work it out.
Right. And we did
Speaker 2 (11:59):
That . That's , that's exactly what I , what
what I thought, John . And ,um, yeah. You know, when , when
you, you know, when you startto understand , uh, how people
work through, through, throughobservation and experience, you
know, you get, you get to knowwhat's gonna work and what's
not gonna work. And I , I , Iknew that if I, if I landed
something on you and tried topush you into something, it
(12:19):
wouldn't work at all. Um, I , Iknew you would need time to
think about it. And that was,that was the plan. So it's a ,
it worked pretty well actually.
.
Speaker 1 (12:30):
Yeah , it sure did.
And there were other occasionsas well. I I won't mention the
video of the geese.
Speaker 3 (12:37):
.
Speaker 1 (12:41):
People don't need to hear that one. They can contact
me if they wanna know thatstory.
Speaker 2 (12:46):
It is a good, it's a , it is a good story. And , uh,
and uh , it is , it is a good ,uh, good segue to, you know,
one of the things that you knowabout me too, John, I do
sometimes fly by the seat of mypants .
Speaker 1 (13:00):
What do , what do you mean? Sometimes
Speaker 3 (13:02):
?
Speaker 1 (13:06):
Uh , yeah, but, and the good thing is we can laugh
about it now and we laughedabout it at the time. Um,
although, although it wasn'tall, all the better roses and
occasionally , um, we wouldyeah, get upset with each other
a little bit, but we wouldalways sit down and have a
coffee and talk about it and,and then we'd laugh it off and,
(13:28):
'cause I remember an agreementwe made up front that when we
were thinking of doingsomething and we didn't
necessarily agree on how wewere gonna do it or what we
were gonna do, I remember yousaying, look, one time we'll go
with what I think and anothertime we'll go with what you
think and we'll, we'll justalternate it. And , um, and I
(13:51):
think that worked very welltoo. But it's having those
understandings upfront , isn'tit? That makes the difference.
It , it ,
Speaker 2 (13:57):
It is . And you know, you , you , you've
touched on one of the , one ofthe golden rules , uh, of, of
successful partnerships and,and that , and that is, I, I
always think 50 50 is, is , uh,is absolutely the best way to
go if you can, I , if it worksfor your business and , and
your partnership. Becauseequality, you know, when ,
when, why would you need, youknow, a lot of people go, well,
(14:17):
I want 51%, you have 49. Well ,immediately when you do that in
a partnership, you are , youare creating a , a hierarchy
and , um, partnerships aresupposed to be equal and work
together and in harmony. And ,uh, yes, you're right, John.
We, we, we, we considerourselves equal. We had great
respect , uh, for each other.
Um , our trust built and we did, uh, share things that was a
(14:41):
crucial
Speaker 1 (14:43):
Yeah, I , I see partnerships now where it's not
50 50 and , uh, it concerns mesometimes . And , uh, yeah,
that 50 50, I think is , isvital.
Speaker 2 (14:56):
Yeah. Even , even , even if it , it's , you know,
sometimes it can't be amonetary 50 50. You understand
that. And you know what, somebusinesses work with minority
partnerships very , very well.
Um , it's just, it's just the50 50, the most important part
about it is , is the trust andrespect and given , given each
other. If you're in apartnership, then you're doing
it together and you go forwardtogether. And, and that's,
(15:17):
that's why it works muchbetter.
Speaker 1 (15:21):
Yeah, absolutely.
It's , um, yeah . Okay. Whatabout, I put family members ,
uh, in my notes to, to talkabout, because family
businesses are a , a strangeanimal in , in themselves quite
(15:41):
often. And we, you and I hadsome family businesses that
were really good clients, but Isee sometimes there can be ,
um, challenges in a familybusiness with pe getting people
to work together and whetherthey've got a share of the
business and all that sort ofstuff. Have you got any
(16:02):
thoughts on that?
Speaker 2 (16:04):
Yeah, look, you know , um, the , the , the rules ,
uh, apply whether it's a familybusiness or not, you know, the,
the, the obvious dangers in afamily business is that you,
you run too high on emotion.
Um, you know, there's always aplace in business and in life ,
um, and, and in partnershipsfor, you know, heart and mind
working together in harmony.
Um, but, you know, businessesare there to make money.
(16:26):
Businesses run on numbers. Andso you, you , in , even in a
family business, you have totake the emotion out and you
have to look at the cold hardfacts , uh, which are the
numbers, and you have to makesure that the, the emotions and
the relationships actuallysupport the business and not
get in the way of it .
Speaker 1 (16:46):
Yeah. And remember that it is a business ,
um,
Speaker 2 (16:52):
Indeed , you know, you have some, have some rules
about when you separate, youknow, you probably need to
separate business and, and ,and , and family life as well.
You know, if you , if you takeit all home with you and it
continues there, then uh, then, uh, you know, you're gonna
run outta steam.
Speaker 1 (17:07):
Yep , yep . That , that's for sure. Keeping that
separation. So what about , um,when partnerships end? Uh ,
because again, it comes back tobeginning with the end in mind
and having a common goal. Um,the problems can arise if, if
(17:28):
one person wants to exit thebusiness and another one
doesn't. Um, again, I mean,communication is the answer to
a lot of these things, isn'tit? Talking and having robust
conversations.
Speaker 2 (17:43):
It , it , it , it , it , it is, but, but sometimes
that , that's not enough. And,and what you said earlier on,
John, beginning with the end ofin mind is another of , uh, the
golden rules I have forbusiness partnerships. Um, you
and I started with an exit,exit plan because, you know, at
the beginning of a partnershipand everything in the garden is
rosy. You , you , you're doingit. You know, your purpose is
(18:06):
obviously , uh, are there tobenefit you, the partners in
the business, you know,whether, whether , whether the
purpose is to create moreopportunities, you know, more
effective utilization of assets, uh, mitigate risk. There's,
there's, there's a purpose. Butof that , at that moment in
time when you're starting, youknow, things are happy , uh, if
(18:28):
you build your exit plan whenyou're happy, it's much easier
to execute at the end of itwhen things might not be so
happy. 'cause sometimes thingsdon't always go well.
Speaker 1 (18:38):
Yeah, that's a good point. Yeah. The business may
not have gone well for reasonsexternal to the partnership, so
then it's , um, you still gottaknow how you're gonna get out
of it now. Yeah. We,
Speaker 2 (18:51):
We actually, we actually built our exit plan
into our business plan right atthe beginning, John , uh, and,
and you know, we had a goal andthe target and, and we knew
what we needed to do to get ourbusiness ready for that moment
when we could sell it
Speaker 1 (19:04):
Indeed and , and sell it. We did. And , and very
well, mm-Hmm . Even though wetried to go about selling it
ourselves first and stuffedthat up, and
thank God , uh, a great brokeron who taught me everything I
know now about gettingbusinesses ready for sale and
selling them . So we got , andwe got about 25% more selling
(19:27):
it that way than we would'vedone if we'd sold it a sell .
So
Speaker 2 (19:30):
We , we , we , we did, but it was good to put our
hand in and in the experts andthat very man, by the way, John
now lives very close to me downhere.
Speaker 1 (19:37):
Yes, yes, indeed. I know he is down that way
somewhere, so , uh, yeah .
Yeah. And
Speaker 2 (19:43):
He's about a drive and a seven , nine from my
house.
Speaker 1 (19:46):
. Okay.
. The , um, the otherthing I , and I recommend this
to business owners as well, ifthey're getting into a
partnership, and that is to goand see a lawyer and get a
partnership agreement drawn up.
Now I say that with a littlebit of , um, trepidation
(20:06):
because you and I didn't dothat. Um, we certainly talked
everything through and did , wedid write some stuff down and
we, we basically had anagreement. But I still think,
and I'll get your opinion onthis, but I still think, and
particularly talking to alawyer about these sort of
things, a , a partnership or anownership agreement, I think in
(20:30):
a lot of cases is a veryvaluable thing to do upfront
when things are, are good orstarting off. 'cause the only
time you're gonna need it isdown the track if, if the
wheels fall off,
Speaker 2 (20:44):
Or , or , or if you're , or if you're ready to,
you know, one partner's readyto exit and the other isn't,
you know , uh, you know, thingscan change change now . No, I
agree. You , you know, havingthat written up at , at the
beginning is good. I thinkwhere, where we , uh, needed
that less was because we werein a franchise and the
franchise had its own rules ,uh, that we needed to follow.
Uh, so, so that made it, youknow, quite a lot simpler in
(21:07):
terms of legalities. Um, uh,however, even when you use a
lawyer, it should still be thepartnership's plan that the
lawyer makes legal. And I thinkthat's critical. You , you'd ,
you're better off not telling ,getting a lawyer to tell you
what to do and how to do it.
You better tell the lawyer whatyou wanna do and how you , how
you wanna do it, and make surethat the , uh, the lawyer can
(21:28):
tie up all the, the legalloopholes, so it really works
for you. Well, that way yourexit plan is gonna be a , a , a
good robust exit plan.
Speaker 1 (21:36):
Yeah. Yeah. That's really good advice. And I know
a good lawyer that, that doesthat sort of thing. In fact,
I've done a podcast with him onthat very topic. Um, if you
want to go and find thatpodcast, you can , um, listen
to Steven Brown talking aboutownership agreements. 'cause
again, it's not necessarilybecause the , the partnership
(21:57):
doesn't work, but if onepartner gets ill or passes away
or something like that, thenwhat's going to happen to their
part of the business? You know,it's, it's, it's a bit morbid
to think about those thingsupfront , but it's a good idea
to have thought it through andhave a plan in place. Um, a
(22:18):
again, just to protect theperson that's left behind.
Speaker 2 (22:23):
Yeah, absolutely.
Speaker 1 (22:26):
So, okay. Um, anything else you want to add,
Peter?
Speaker 2 (22:31):
Well, look, you know, I , I think, I think the
most important things are , areto, to go in , go in with ,
with an open mind. Uh , makesure that there's a , a good
purpose that , that you'regonna achieve something better
than you've got without thepartnership. So as, as I said
earlier, you know, maybe ,maybe there's opportunities to
grow your business faster.
Maybe you, maybe there's , uh,diverse customer bases that you
(22:54):
can, you can both access. Maybethere's assets you can utilize
more effectively. May , may,maybe that there's opportunity
to , uh, do a lot more becauseyou have separate roles and
responsibilities. But I thinkthe golden rules for me, start
with the end in mind. Have ,have , have an exit plan. Have
a robust business plan thatincludes the exit plan. Make
(23:15):
sure that the person you'regoing to go into a partnership
with , you have full trust andrespect for in that, that
respect has to be mutual. Um,make sure the benefits outweigh
the, the downsides. Um, havegood, good roles and
responsibilities so that youhave , uh, uh, equality. Have
that 50 50 in mind and thendevelop a good process for your
(23:38):
business so that it workssmoothly . Those are the things
I would suggest , uh, are gonnaincrease your chances of
Speaker 1 (23:46):
Beautifully summed up. Beautifully summed up. So
that's great. Thanks for that.
And , uh, yeah, thanks forcatching up. Always good to
talk to you. How can people getin contact with you if they
want to talk to you?
Speaker 2 (24:01):
Oh , look , um, uh, my, my email address is
peter@investorsinpeople.com au.
I don't often take on newclients these days, however,
any friend of yours, John , isalways a friend of mine.
Speaker 1 (24:15):
Alright , Peter, I appreciate that. And , um,
let's , um, catch up soon and,and have a beer and a Barbie or
something.
Speaker 2 (24:23):
That'd be a very good idea. I think we may do
that very soon.
Speaker 1 (24:26):
We may indeed. And it may be just in your neck of
the woods.
Speaker 2 (24:30):
Splendid.
Speaker 1 (24:31):
All right , Peter, thanks very much and thanks
everyone for listening. And ifyou'd like to know more about
what I do, you can go to johndenton.com au and learn how I
help business owners get theirbusinesses ready for sale,
because a business that's readyfor sale is well worth keeping.
So bye for now. Look forward tohaving you on another podcast
(24:53):
soon.
Well , welcome everyone to another episode in
the Business Ready for Salepodcast series today. It's my
great pleasure to have a verygood friend and former business
partner with me, Mr. PeterBangal , from Investors and
People. Good day , Peter.
Speaker 2 (00:25):
Good day . John, how are you today?
Speaker 1 (00:28):
I'm excellent.
Excellent. Every day aboveground is a good day. How's the
life down the southwest of wa?
Speaker 2 (00:34):
Well , uh, as you know, John, we're living the
dream down here. Uh, it's abeautiful day today . Um, got
up this morning, went down tothe ocean with a dog, and , uh,
had a run on a swim. Uh ,started a day off of a bit of
bit of health and fitness and ,uh, yeah, couple of , uh,
interviews , um, with , uh,people I'm working with in Hong
Kong and us and , uh, now readyfor you . So ,
Speaker 1 (00:57):
wanted to do this podcast onpartnerships is because I get
to talk to a lot of businessowners these days and clients
who are working towards sellingtheir business or getting out
of their business or justgrowing their business. And
(01:18):
whenever I mention getting intoa partnership to them as a way
of achieving their goals, theyfreak out basically and say, no
, no partnerships don't work.
And just a little bit ofbackground about how Peter and
I got to be in a partnership.
So I had a training anddevelopment business called
Leadership Management inAustralia that was part of a
(01:38):
franchise. Peter came in fromthe UK and bought one of the
other franchise seedsbusinesses, which was a very
similar size to mine. I'd beenin business about seven years
at that time, coming up forseven years. And Peter came to
me and he said, like , I've gottwo goals, and you can correct
me if I get this wrong, Peter
(01:58):
said, I've got two goals. Iwant to get my permanent
residency so I can stay hereand I want to exit the business
in three years and sell and getout. Why don't we put our two
businesses together? Andbecause I'd been in the
business for between six andseven years at that point. And
I loved the business, I lovedthe clients, I loved what we
(02:19):
did. We got some fantasticresults, but I was looking for
a change. And so Peter and I ,uh, checked each other out. Um
, I don't mean policeclearances and all that sort of
stuff. We checked each otherout as personalities and
whether we could work togetherand agreed we got the franchise
or to agree to put the twofranchises together and we got
(02:41):
into a partnership. Um,anything you wanna add to that,
Peter?
Speaker 2 (02:46):
Well, you know, it was a very successful
partnership, John , and weactually achieved our goal ,
um, in about two years andeight months, which was , uh,
which was fantastic. And Ithink when I, when I look back
, um, you know, I, I realizedwhen I started that franchise
that , uh, I didn't have allthe skills I really needed to
make it very successful. Um,and when I met with you and I
(03:09):
watched the way you operate,you know , I haven't met you at
conferences , uh, that thefranchise offered and then met
you in Perth and we talked afew strings . I thought, well,
this gentleman knows how to runthe franchise. He's, he's, he's
, uh, he's the , the bee'sknees at running the franchise
and all the things that goalong with it, which I'm not.
And if he could do that and Icould go out and develop our
business, which is one of mystrengths, I just figured we
(03:31):
could make a bigger businessthan the two we had. And also
we could, you know, probablymake the business ready for
sale. And , and , uh, that'swhat we did.
Speaker 1 (03:39):
Yeah, we , we came up with the mantra Exit with
equity in three years. Mm-Hmm .
So, and , and that's the thing.
If we look at why somepartnerships work, we had a
common goal, and that was toexit with equity in three
years.
Speaker 2 (03:57):
We did. And , and the great thing wa was John , I
, I , I think we exceeded ourexpectations that if you look
at the value of our business,when , when we started to, when
we sold, I reckon, you know, weprobably increased the value by
about 10 times , uh, just byworking together.
Speaker 1 (04:12):
Yeah, absolutely. It was , um, and we
though we were differentpersonalities and different
skill sets , we had one of thethings, and it came out in one
of the franchisors trainingsessions, if you remember, we
had very similar values. We did. And that's critical, I think,
(04:33):
in a partnership.
Speaker 2 (04:34):
Yeah. Very , very, very much so because, you know,
the , any, any partnership isinevitably a relationship, and
relationships are built ontrust and mutual respect. And
the under thing that underpinstrust and mutual respect is, is
having good values. So yeah. II couldn't agree more.
Speaker 1 (04:51):
Yeah, I remember that exercise that we did where
the , I mean, I can't rememberhow many people were in the
room, probably 60 or 70 or so,and we all did the values
exercise, and then the guyrunning the session said, now
find , go around the room andfind somebody, or find other
people that have got verysimilar values to you. And, and
you and I, I ended up findingeach other, which I thought was
(05:14):
uncanny . Really ?
Speaker 2 (05:16):
Yes. It was almost as if it was men . And , uh,
and the , and the more wetalked, not only did we realize
we had the same values, but werealized we had , um, diverse ,
uh, skills , uh, uh, that would, uh, be , would be
complimentary in a partnership.
Speaker 1 (05:31):
Absolutely. It was , um, appreciating the
differences, I think, and a , abusiness needs those different
skills. When people get intopartnership with people who are
the same as them, that's whenit can become a problem, I
think. What do you say ?
Speaker 2 (05:48):
Yeah, indeed , indeed . You know, I mean, when
you're starting any , any , anybusiness venture , you're
making any big decisions inbusiness or life, you really
need to have a purpose and anoutcome and a process. Um, and
so, you know, if you , if yousit out with , uh, with , with
checking out the purpose and ,and , and the , uh, the
outcome, you know , uh, uh, for, for us, there was an
(06:09):
opportunity where we could getsynergy through our diverse
skills. Uh, you know, and wecould make two plus two equal
five, or in this case actually10. Um, and, and we could , uh,
work harmonious togetherbecause we would've distinct
roles and responsibilities. Ithink that came to us very
early in the, in ourrelationship, John .
Speaker 1 (06:28):
Yeah. Yeah. Talk a bit more about roles and
responsibilities. How do you,when you get into partnership
with somebody, how do you workout who's doing what?
Speaker 2 (06:39):
Well, it's , it's rather like, you know, if you
were interviewing someone for a, for a job, you know, you ,
you , you look, you know, the,the , uh, capability is made up
of , of knowledge and , andskill and attitude. And so you,
you search into a person'sbackground, like you would look
reading a CV and see whatthey've done, how they've
operated, what successesthey've had, what, what
(07:00):
failures they may have had ,uh, and, and , and get to
understand what , what madethem strong and what , what
made them win. And once youstart to understand people's
strengths, you can comparethose strengths of yours. Uh ,
and then you can look at eachother's weaknesses and , and
you can recognize that if, ifyour strengths equal, my
weaknesses and my weaknessesare are built on, on , on the
(07:21):
strengths of , of , of you,then , um, you know, we've got
a very good , uh, partnershipto it together.
Speaker 1 (07:27):
Yeah. I know as part of your business now, you help
businesses recruit people, and, um, you know, tell us a
little bit about the processyou go through there.
Speaker 2 (07:41):
Yeah, so look, you know , um, our business today,
we we're a managementconsultancy. Um, uh, about half
of our work is in leadershipcoaching. We work with major
oil companies and miners , andalso some small companies. And
we do recruitment for a , asmall to medium enterprises.
And, and , uh, our recruitmentprocess is always very, very
(08:01):
robust. Um, there , there wouldalways be , uh, you know ,
beginning with a , with a cv asmost things do, and, and early
meetings and questions , um,and, and, and building a
relationship so that you canget to know a person, you know,
quite , quite often. Um,there's the two major aspects
(08:22):
of, of, of how recruitmentworks is, is someone eligible?
Do they have the skills andexperience and are they
suitable? Uh, you know, willthey fit in with the business
and the people? So you arealways looking at eligibility
and suitability when you'rerecruiting people. And same for
a partnership. Eligibility inexperience, complimentary
skills, and suitability. How dowe get on together? Do we , can
(08:45):
we, do we have similar values?
Can we build trust and respect?
You know, can we work , can weidentify each other's strengths
and, and allocate roles andresponsibilities that are
suitable to each other? Thoseare the questions you ask , uh,
in a partnership, but they'rethe same questions that you ask
when I'm recruiting is, is aperson gonna fit in that
company? Do I know the teamwell enough? Will they work
(09:07):
with for the boss? Will theboss's method of leadership
apply to that person and getthe best out of them ? What are
those things that , you know,are both on the suitability
side and the eligibility side?
Speaker 1 (09:19):
Yeah, it's , um, that suitability, I've never,
that's a really nice way ofputting it. Eligibility and
suitability. It's gettingpeople to, that will fit your
culture. But I guess when youget into a partnership, same
thing I'll talk about, I'll askyou about , um, starting the
process of getting into apartnership in a sec, but I
(09:41):
just wanna , while we'rerecently talked about
appreciating differences anddifferent personalities , uh, I
wanna tell the story about theday that you came into the
office around 10 o'clock timewith a egg and bacon sonny in
your hand, and then , and well, two and two cups of coffee.
Do you remember? I do. And youand I was sitting on the
(10:03):
computer 'cause that's what Iloved doing. And , um, and you
sat down and you said, Ibrought her some, some
breakfast, egg and bacon soni acup of coffee. And I thought,
Hmm , okay, I wonder what'scoming here. And then , uh, as
we're eating away and drinkingaway, he said, there's
something I want to talk to youabout. And I thought, oh , I ,
here we go. We're gonna get tothe bottom line now. And , uh,
(10:27):
and then you said, now I don'twant an answer and I don't want
you to comment. We'll talkabout it again tomorrow, but
I'm gonna tell you what I'vedone. All right . And I'm
thinking, yeah. Okay. And , um,just for the listeners
information being part of afranchise, we had a suite of
programs that we sold and yousaid, I've just sold a customer
(10:51):
service training program to x,y , Z company. And it was quite
a reasonably large Perth basedcompany. And I freaked out
'cause we didn't have acustomer service program that
we sold. And , um, and Istarted to freak out and you
said, look, I told you I don'twant any response, any answer
now, we'll sit down and we'lltalk about it tomorrow. And ,
(11:15):
um, 'cause you knew, again,it's understanding and
appreciating those differences.
And I think that story makesthe point that you knew what my
response would be. And so youprepared me for it. You
softened me up with a egg andbacon sounding and a cup of
coffee. Um, but said, becauseyou knew that I'm a Muller , I
(11:37):
like to mold things overengineer my training. I need
data and facts. So when youpresented me with, I've just
sold customer service trainingto x, y , Z company, you knew
that given 24 hours, I'dprobably think it through and
think, oh, okay, well I couldcome up with a solution for
that and we'd work it out.
Right. And we did
Speaker 2 (11:59):
That . That's , that's exactly what I , what
what I thought, John . And ,um, yeah. You know, when , when
you, you know, when you startto understand , uh, how people
work through, through, throughobservation and experience, you
know, you get, you get to knowwhat's gonna work and what's
not gonna work. And I , I , Iknew that if I, if I landed
something on you and tried topush you into something, it
(12:19):
wouldn't work at all. Um, I , Iknew you would need time to
think about it. And that was,that was the plan. So it's a ,
it worked pretty well actually.
Speaker 1 (12:30):
Yeah , it sure did.
And there were other occasionsas well. I I won't mention the
video of the geese.
Speaker 3 (12:37):
Speaker 1 (12:41):
People don't need to hear that one. They can contact
me if they wanna know thatstory.
Speaker 2 (12:46):
It is a good, it's a , it is a good story. And , uh,
and uh , it is , it is a good ,uh, good segue to, you know,
one of the things that you knowabout me too, John, I do
sometimes fly by the seat of mypants
Speaker 1 (13:00):
What do , what do you mean? Sometimes
Speaker 3 (13:02):
Speaker 1 (13:06):
Uh , yeah, but, and the good thing is we can laugh
about it now and we laughedabout it at the time. Um,
although, although it wasn'tall, all the better roses and
occasionally , um, we wouldyeah, get upset with each other
a little bit, but we wouldalways sit down and have a
coffee and talk about it and,and then we'd laugh it off and,
(13:28):
'cause I remember an agreementwe made up front that when we
were thinking of doingsomething and we didn't
necessarily agree on how wewere gonna do it or what we
were gonna do, I remember yousaying, look, one time we'll go
with what I think and anothertime we'll go with what you
think and we'll, we'll justalternate it. And , um, and I
(13:51):
think that worked very welltoo. But it's having those
understandings upfront , isn'tit? That makes the difference.
It , it ,
Speaker 2 (13:57):
It is . And you know, you , you , you've
touched on one of the , one ofthe golden rules , uh, of, of
successful partnerships and,and that , and that is, I, I
always think 50 50 is, is , uh,is absolutely the best way to
go if you can, I , if it worksfor your business and , and
your partnership. Becauseequality, you know, when ,
when, why would you need, youknow, a lot of people go, well,
(14:17):
I want 51%, you have 49. Well ,immediately when you do that in
a partnership, you are , youare creating a , a hierarchy
and , um, partnerships aresupposed to be equal and work
together and in harmony. And ,uh, yes, you're right, John.
We, we, we, we considerourselves equal. We had great
respect , uh, for each other.
Um , our trust built and we did, uh, share things that was a
(14:41):
crucial
Speaker 1 (14:43):
Yeah, I , I see partnerships now where it's not
50 50 and , uh, it concerns mesometimes . And , uh, yeah,
that 50 50, I think is , isvital.
Speaker 2 (14:56):
Yeah. Even , even , even if it , it's , you know,
sometimes it can't be amonetary 50 50. You understand
that. And you know what, somebusinesses work with minority
partnerships very , very well.
Um , it's just, it's just the50 50, the most important part
about it is , is the trust andrespect and given , given each
other. If you're in apartnership, then you're doing
it together and you go forwardtogether. And, and that's,
(15:17):
that's why it works muchbetter.
Speaker 1 (15:21):
Yeah, absolutely.
It's , um, yeah . Okay. Whatabout, I put family members ,
uh, in my notes to, to talkabout, because family
businesses are a , a strangeanimal in , in themselves quite
(15:41):
often. And we, you and I hadsome family businesses that
were really good clients, but Isee sometimes there can be ,
um, challenges in a familybusiness with pe getting people
to work together and whetherthey've got a share of the
business and all that sort ofstuff. Have you got any
(16:02):
thoughts on that?
Speaker 2 (16:04):
Yeah, look, you know , um, the , the , the rules ,
uh, apply whether it's a familybusiness or not, you know, the,
the, the obvious dangers in afamily business is that you,
you run too high on emotion.
Um, you know, there's always aplace in business and in life ,
um, and, and in partnershipsfor, you know, heart and mind
working together in harmony.
Um, but, you know, businessesare there to make money.
(16:26):
Businesses run on numbers. Andso you, you , in , even in a
family business, you have totake the emotion out and you
have to look at the cold hardfacts , uh, which are the
numbers, and you have to makesure that the, the emotions and
the relationships actuallysupport the business and not
get in the way of it .
Speaker 1 (16:46):
Yeah. And remember that it is a business
um,
Speaker 2 (16:52):
Indeed , you know, you have some, have some rules
about when you separate, youknow, you probably need to
separate business and, and ,and , and family life as well.
You know, if you , if you takeit all home with you and it
continues there, then uh, then, uh, you know, you're gonna
run outta steam.
Speaker 1 (17:07):
Yep , yep . That , that's for sure. Keeping that
separation. So what about , um,when partnerships end? Uh ,
because again, it comes back tobeginning with the end in mind
and having a common goal. Um,the problems can arise if, if
(17:28):
one person wants to exit thebusiness and another one
doesn't. Um, again, I mean,communication is the answer to
a lot of these things, isn'tit? Talking and having robust
conversations.
Speaker 2 (17:43):
It , it , it , it , it , it is, but, but sometimes
that , that's not enough. And,and what you said earlier on,
John, beginning with the end ofin mind is another of , uh, the
golden rules I have forbusiness partnerships. Um, you
and I started with an exit,exit plan because, you know, at
the beginning of a partnershipand everything in the garden is
rosy. You , you , you're doingit. You know, your purpose is
(18:06):
obviously , uh, are there tobenefit you, the partners in
the business, you know,whether, whether , whether the
purpose is to create moreopportunities, you know, more
effective utilization of assets, uh, mitigate risk. There's,
there's, there's a purpose. Butof that , at that moment in
time when you're starting, youknow, things are happy , uh, if
(18:28):
you build your exit plan whenyou're happy, it's much easier
to execute at the end of itwhen things might not be so
happy. 'cause sometimes thingsdon't always go well.
Speaker 1 (18:38):
Yeah, that's a good point. Yeah. The business may
not have gone well for reasonsexternal to the partnership, so
then it's , um, you still gottaknow how you're gonna get out
of it now. Yeah. We,
Speaker 2 (18:51):
We actually, we actually built our exit plan
into our business plan right atthe beginning, John , uh, and,
and you know, we had a goal andthe target and, and we knew
what we needed to do to get ourbusiness ready for that moment
when we could sell it
Speaker 1 (19:04):
Indeed and , and sell it. We did. And , and very
well, mm-Hmm . Even though wetried to go about selling it
ourselves first and stuffedthat up,
thank God , uh, a great brokeron who taught me everything I
know now about gettingbusinesses ready for sale and
selling them . So we got , andwe got about 25% more selling
(19:27):
it that way than we would'vedone if we'd sold it a sell .
So
Speaker 2 (19:30):
We , we , we , we did, but it was good to put our
hand in and in the experts andthat very man, by the way, John
now lives very close to me downhere.
Speaker 1 (19:37):
Yes, yes, indeed. I know he is down that way
somewhere, so , uh, yeah .
Yeah. And
Speaker 2 (19:43):
He's about a drive and a seven , nine from my
house.
Speaker 1 (19:46):
to business owners as well, ifthey're getting into a
partnership, and that is to goand see a lawyer and get a
partnership agreement drawn up.
Now I say that with a littlebit of , um, trepidation
(20:06):
because you and I didn't dothat. Um, we certainly talked
everything through and did , wedid write some stuff down and
we, we basically had anagreement. But I still think,
and I'll get your opinion onthis, but I still think, and
particularly talking to alawyer about these sort of
things, a , a partnership or anownership agreement, I think in
(20:30):
a lot of cases is a veryvaluable thing to do upfront
when things are, are good orstarting off. 'cause the only
time you're gonna need it isdown the track if, if the
wheels fall off,
Speaker 2 (20:44):
Or , or , or if you're , or if you're ready to,
you know, one partner's readyto exit and the other isn't,
you know , uh, you know, thingscan change change now . No, I
agree. You , you know, havingthat written up at , at the
beginning is good. I thinkwhere, where we , uh, needed
that less was because we werein a franchise and the
franchise had its own rules ,uh, that we needed to follow.
Uh, so, so that made it, youknow, quite a lot simpler in
(21:07):
terms of legalities. Um, uh,however, even when you use a
lawyer, it should still be thepartnership's plan that the
lawyer makes legal. And I thinkthat's critical. You , you'd ,
you're better off not telling ,getting a lawyer to tell you
what to do and how to do it.
You better tell the lawyer whatyou wanna do and how you , how
you wanna do it, and make surethat the , uh, the lawyer can
(21:28):
tie up all the, the legalloopholes, so it really works
for you. Well, that way yourexit plan is gonna be a , a , a
good robust exit plan.
Speaker 1 (21:36):
Yeah. Yeah. That's really good advice. And I know
a good lawyer that, that doesthat sort of thing. In fact,
I've done a podcast with him onthat very topic. Um, if you
want to go and find thatpodcast, you can , um, listen
to Steven Brown talking aboutownership agreements. 'cause
again, it's not necessarilybecause the , the partnership
(21:57):
doesn't work, but if onepartner gets ill or passes away
or something like that, thenwhat's going to happen to their
part of the business? You know,it's, it's, it's a bit morbid
to think about those thingsupfront , but it's a good idea
to have thought it through andhave a plan in place. Um, a
(22:18):
again, just to protect theperson that's left behind.
Speaker 2 (22:23):
Yeah, absolutely.
Speaker 1 (22:26):
So, okay. Um, anything else you want to add,
Peter?
Speaker 2 (22:31):
Well, look, you know, I , I think, I think the
most important things are , areto, to go in , go in with ,
with an open mind. Uh , makesure that there's a , a good
purpose that , that you'regonna achieve something better
than you've got without thepartnership. So as, as I said
earlier, you know, maybe ,maybe there's opportunities to
grow your business faster.
Maybe you, maybe there's , uh,diverse customer bases that you
(22:54):
can, you can both access. Maybethere's assets you can utilize
more effectively. May , may,maybe that there's opportunity
to , uh, do a lot more becauseyou have separate roles and
responsibilities. But I thinkthe golden rules for me, start
with the end in mind. Have ,have , have an exit plan. Have
a robust business plan thatincludes the exit plan. Make
(23:15):
sure that the person you'regoing to go into a partnership
with , you have full trust andrespect for in that, that
respect has to be mutual. Um,make sure the benefits outweigh
the, the downsides. Um, havegood, good roles and
responsibilities so that youhave , uh, uh, equality. Have
that 50 50 in mind and thendevelop a good process for your
(23:38):
business so that it workssmoothly . Those are the things
I would suggest , uh, are gonnaincrease your chances of
Speaker 1 (23:46):
Beautifully summed up. Beautifully summed up. So
that's great. Thanks for that.
And , uh, yeah, thanks forcatching up. Always good to
talk to you. How can people getin contact with you if they
want to talk to you?
Speaker 2 (24:01):
Oh , look , um, uh, my, my email address is
peter@investorsinpeople.com au.
I don't often take on newclients these days, however,
any friend of yours, John , isalways a friend of mine.
Speaker 1 (24:15):
Alright , Peter, I appreciate that. And , um,
let's , um, catch up soon and,and have a beer and a Barbie or
something.
Speaker 2 (24:23):
That'd be a very good idea. I think we may do
that very soon.
Speaker 1 (24:26):
We may indeed. And it may be just in your neck of
the woods.
Speaker 2 (24:30):
Splendid.
Speaker 1 (24:31):
All right , Peter, thanks very much and thanks
everyone for listening. And ifyou'd like to know more about
what I do, you can go to johndenton.com au and learn how I
help business owners get theirbusinesses ready for sale,
because a business that's readyfor sale is well worth keeping.
So bye for now. Look forward tohaving you on another podcast
(24:53):
soon.
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