To say the least, business partnerships of any kind are always going to be challenging. In fact, the majority of partnerships I’ve ever seen have failed, rather than succeeded.
What’s the problem? I believe the issue is that a business partnership is much like a marriage. Business partners have many of the same hot-button issues as spouses. And, of course, statistics tell us that half of marriages are doomed to failure.
You have the “I’m working harder than you”issue. Then, there’s the “I want to invest more money into the business, versus I need money to be coming out of the business”issue. No doubt, you also have the sticking point of dealing with cash – and, clearly, the temptation of stealing cash has ruined more than a few relationships (laundromat-related and otherwise).
Due to this last issue, I always recommend a card system that is fully auditable by all partners. This will eliminate any suspicions that may commonly crop up in a cash-based business. A card system enables complete transparency with regard to how the laundry business is doing and the amount of cash received.
OK, it’s time for full disclosure: having noted a few of the potential pitfalls surrounding business partnerships, I must admit that my sister, Sally Anderson, and I were partners in a laundromat.
In 2010, my distributorship business was really slow, and Sally had always been interested in vended laundries. She asked if I wanted to be her partner and build a store together. We spent almost a year scouting locations near her home. We eventually found a great site and had a general contractor built us a new laundromat. Of course, I insisted on a card system for full auditability.
No, I wasn’t worried about my sister as a reliable business partner; however, I felt strongly that everything should “be on the up and up.” Also, by that time, I was moving my other stores to all cards, eliminating quarters, and enjoying the benefits of fully card-operated businesses.
Our store’s revenue started slow but steady. The laundry began to hit its stride after the second year and, five years later, is still growing. Sally handled all of the day-to-day operations. My main role was helping design and build the facility, as well as tackling difficult repairs or other problems.
Several times a year, I would visit the store for the day and handle the more difficult repairs. However, I was always in communication with Sally about promotions, marketing programs, and so on. After the first year, she was paid a modest manager’s salary and was also paid for any shifts she may have worked. We both shared in the profits and the tax depreciation.
Then, probably the best moment of our partnership arrived – when Sally asked to buy me out. The “student”had graduated. She no longer needed me to hold her hand. She had become a true laundry owner and operator. And Sally and I will always have a stronger relationship, thanks to our laundromat partnership.
The success of that partnership was due in part to the following:
- We had a card system that was fully auditable.
- We had clearly defined roles and responsibilities.
- We respected the roles and responsibilities of each partner. We didn’t try to manage the other partner’s role or responsibilities.
- We trusted each other completely (with or without a card system). Our thoughts were always that our family relationship was bigger and more important than any amount of money.
- We are blood relatives, and those relationships have a much better chance of success than business partnerships between friends.
Yes, as I noted at the outset, business partnerships are difficult and challenging. But they also can be truly rewarding. Sally is my ex-business partner and the best laundromat student I’ve ever had.
And, to this day, we still discuss the laundry business with each other.