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Which 3 Partnerships Must IT Consultants Avoid Like the Plague?

As the IT guy, the SEO guru, or the webmaster, you are often approached by others who want to "partner" with you on a business or project. You'll be promised champagne dreams and a bank account the size of tomorrow. You've got to be hyper vigilant that you don't get yourself into a situation that not only fails to generate revenue or profit, but also wastes your time and money!

Here are three warning signs the person who wants to partner with you will ultimately only waste your time.

1. The Sweat Equity Guy

If you'll just help me build it, we'll be rich!
This guy has a brilliant idea. He thinks it's brilliant. His friends think it's brilliant. It's a million dollar idea better than the pet rock. And he's going to let you in on it, FOR FREE.

He makes it sound like it is the best investment ever made. All upside, no downside, all you have to invest is: TIME.

Of all the resources on the planet, TIME is the most valuable one because it is a truly non-renewable resource. You can always make more money. You can always hire more people. You can even trash your entire business and start a new one. Time, however, keeps on "slippin' slippin' slippin' into the future".

So what are you going to get in exchange for your most valuable resource? Sweat equity? Sweat equity is term invented by charlatans who want to trick you into building something for them. Don't fall for it. You can't get a million dollar house for "sweat equity," which means you're not likely to get a million dollar business for it either.

Businesses take money to start, money to market, money to run, and money to make profitable.

There is no such thing as sweat equity.

2. The Big Idea Guy.

I'm just the idea guy, but this is an incredible idea!
This guy has the next big idea. It's huge. Everyone will love it. It's so simple, neither he nor you can figure out why no one has ever done it before. He's got the next Twitter, eBay, or YouTube. Best of all, there's NO competition!

He's the opposite of the sweat equity guy: he wants you to invest in him. He wants to "sell" you his idea if you'll just take it, run with it, and give him a cut.

Problem is: he doesn't know how to monetize it, and he doesn't have any research to prove that there is demand for his product.

The big idea guy wants you to invest your hard-earned cash, or well-trained people, or TIME into an idea that he has not proven has any merit other than it is "awesome" in his own eyes.

Just like every mother thinks their child is beautiful, the big idea guy thinks that his idea is at least as good as sliced bread, and probably better than Play Doh. He did the numbers in Excel, and based on imaginary demand, fictional customers and no research, he has estimated that you will be clearing $50,000 / month in profit.

He even made a graph, and pasted it into a PowerPoint presentation, along with some pictures of stacks of money he found using Google image search.

You, however, must dare to call the baby ugly. This baby is wretched with one eye higher than the other, drool coming out its mouth, and if it were a hyena its mother would probably just eat it.

When there is NO competition, that means there is NO money to be made. Others have already tried and failed because people just aren't buying that product because there is NO NEED.

Avoid this guy at all costs. His idealism will get in the way of business. He'll drain your resources chasing dreams.

3. The Ghost of Business Past

Trust me, together, we'll make millions.
This dude is a genius. Everywhere he goes, some business grows. Everyone he works with makes TONS of money. He's done it over and over.

Sounds like the perfect partner, right? Almost. The Ghost of Business past has one flaw: he's a rolling stone. He's done it "over and over" because he doesn't follow through to the end.

History shows that he starts a business, runs it, makes it profitable, then after six months to a year, there's a falling out because the "other guy" in his business is crazy, stupid, or a sociopath.

The old saying is that if Bob has a problem with everyone, the problem is probably Bob.

The Ghost of Business past is stubborn, immovable and callous. He thinks he is right all the time, and he has low self esteem because he believes no one treats him fairly.

If you go into business with the Ghost of Business past, you'll notice two things:
1) somehow, you're taking on more risk than he is, and
2) he's, somehow, doing you a "favor" by working with you.

The question to ask is: "why doesn't this guy just go into business by himself, for himself? Why does he want to work with me?" Nine times out of ten you'll find that the Ghost of Business past wants all the reward, but none of the risk. So, he carefully ochestrates a deal where you're putting up money in exchange for his know-how, and all he wants is his salary and / or a percentage of the profits.

He'll give you a deal that you can't refuse, but you must. After six months to a year, when he's built up the business to the point where it is profitable and cannot run without him, he'll leave. You'll be left holding the bag with a business that can no longer operate. You'll be the one who has signed on the dotted line, who has guaranteed the loans or the line of credit.

He'll disappear like a ghost, and you'll be the one who wishes they were dead.

So what are the rules for partnership?

I have three:

1. Clear research that shows people will buy the product.

This research is relatively easy to get because it is being done for you everyday. It's called: competition. If you cannot find a competitor, than it is likely that there is not a lot of money to be made. The free market system fills all perceived needs (notice I said perceived, not real! But that's another article for another time). When there is a perceived need that is not being fulfilled, someone will step forward and say "I'll do that for a fee!" If there is no one who is successfully doing what you want to do, there are only two possibilities: either there is no money to be made, or you've won the idea lottery. The odds of the latter are the same as winning the real lottery.

2. Equal risk for equal reward.

If they cannot put any skin in the game, then it's a non-starter. This truth has been taught for 2,000 years: "For where your treasure is, there your heart will be also." If you are to partner with someone, you must have equal share of the risk. Equal investment. Equal reward. If your prospective partner does not want to invest, or they do not have the money to invest, then they are not a good partner for you.

When you invest all the time (sweat equity) or you are investing the vast majority of the money, your partner has very little to lose, and therefore has ultimate freedom and power over you. Once he invests his treasure or time into something else, he'll leave you holding the bag.

3. Solid Common Interests

When you partner with someone, it should be like a marriage. For better, for worse. Through thick and thin, through profit and loss.

The only way to make the partnership successful is to ensure that your mutual interests are properly placed. If you simply rely on your friendship, your familial relationship, or geographic juxtaposition, your partnership will ultimately fail.

When two friends partner, they must have solid, immutable common interests over and above the friendship. They must always place the friendship first, or they will lose the business and the friendship.

When family members partner, they must also have solid immutable common interests that transcend the family relationship. Otherwise, if the business fails, they will lose the business, the money, the friendship among family, and family outings will turn into an excruciating Hugh Grant movie.

Always write out you and your partner's interests on paper. Make sure that both of you agree and promise to put the personal relationship above the business relationship. When each of you honor that relationship, and share a solid, common interest, you are much more likely to succeed. And in the event you don't, you still have your friend, brother, sister, or cousin to share in the grief and loss.


So, remember, when someone wants to partner with you, always look to see: who will benefit? Who will end up paying the bill? How will the risk be shared?

If you don't feel that it is equitable, then it's not a good deal.

Partnership is only partnership, when all areas are equal.

Comments (2)



I have published your article, and have set it to receive the bonus as well.

Nice work!

Page Editor

Great article on business relationship practicalities



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