Latest / Build Your PT Clinic with Bryan Wright, DPT / DON’T TAKE A BUSINESS PARTNER BEFORE YOU CHECK THESE!!!

Transcript

DON’T TAKE A BUSINESS PARTNER BEFORE YOU CHECK THESE!!! · Build Your PT Clinic with Bryan Wright, DPT

• 0:00
  SPEAKER_00: Should you partner in your business?
• 0:02
  SPEAKER_00: You know, this this is something where there's very limited advice going around that says never, not ever, not with a friend, not with an investor, not even with a goat, not with a boat.
• 0:14
  SPEAKER_00: Speaking of boats, that limited advice says that the only ship that sinks is a partnership.
• 0:20
  SPEAKER_00: It's funny, but it's not really that funny because that advice has kept more physical therapists small than any bad hires I've ever seen.
• 0:28
  SPEAKER_00: And the people repeating it are usually right about the pattern and they're actually wrong about the cause.
• 0:34
  SPEAKER_00: So I think we can do this properly.
• 0:36
  SPEAKER_00: I'll show you what actually fails when a partnership fails, why the people repeating that advice keep missing what it is causing that failure, and how to judge the offer that's actually sitting in front of you instead of following a rule that was never written for your particular situation.
• 0:54
  SPEAKER_00: One thing about me before I go further, I took one physical therapy clinic and grew it to a$50 million company with over 21 locations.
• 1:04
  SPEAKER_00: And today I partner with physical therapists to build practices with them.
• 1:08
  SPEAKER_00: So I've sat on both sides of this question.
• 1:11
  SPEAKER_00: I've also put about$3 million of my own money in how to answer those questions.
• 1:16
  SPEAKER_00: And I'll answer the headline question straight, straight up front.
• 1:19
  SPEAKER_00: Yes, you should be open to a partner.
• 1:21
  SPEAKER_00: Whether that turns out to be the best decision of your career or actually one that costs you everything comes down to a couple of things.
• 1:28
  SPEAKER_00: And very few people check either one before they sign.
• 1:32
  SPEAKER_00: So let's be fair to the limited advice first because it comes from an honest place.
• 1:39
  SPEAKER_00: Everybody knows a partnership that went bad somewhere or another.
• 1:44
  SPEAKER_00: Maybe two friends open a clinic, and one of them carries more of the weight and thinks that she does more of the work.
• 1:51
  SPEAKER_00: Resentment will build for many years in that situation, whether either of them know how to articulate it.
• 1:57
  SPEAKER_00: Eventually, the business and the friendship go away, and I've seen this happen a couple of times, and I've actually been part of this.
• 2:04
  SPEAKER_00: Now, that's a true story, and like I said, it happens constantly.
• 2:09
  SPEAKER_00: There are influencers like Dave Ramsey that advise to avoid partnering for these reasons, and he's helped an enormous number of people get out of debt.
• 2:17
  SPEAKER_00: So I'm not going to pretend like he doesn't know what he's talking about.
• 2:20
  SPEAKER_00: However, he speaks to a different genre of people than what I'm speaking to.
• 2:25
  SPEAKER_00: I'm speaking to a group that actually wants to climb higher and higher.
• 2:29
  SPEAKER_00: And so partnerships failing is a pattern.
• 2:32
  SPEAKER_00: It's actually not a cause.
• 2:34
  SPEAKER_00: And I like to say that causation does not equal correlation, meaning the thing that you think causes failure isn't correlated to what you think it does.
• 2:42
  SPEAKER_00: So a pattern with no cause attached to it is useless because you can't actually act on something you don't understand.
• 2:49
  SPEAKER_00: So this causes you to avoid the entire big picture, which is exactly what most PTs who open their own practice do.
• 2:56
  SPEAKER_00: And it's why so many of them are still trading their time and resources for income and they carry the weight of the whole thing on themselves by themselves, you name it.
• 3:07
  SPEAKER_00: Now, what I want you to do is think about the biggest companies that you can name.
• 3:11
  SPEAKER_00: Almost every one of them was built through intentional partnerships.
• 3:15
  SPEAKER_00: If partnering were the problem, none of that would exist.
• 3:18
  SPEAKER_00: We wouldn't even have people on the planet if we didn't partner, right?
• 3:22
  SPEAKER_00: So look at what the failures have in common because it's the same two issues that appear.
• 3:27
  SPEAKER_00: And when you can understand how to read patterns, that's when you can really make a big difference.
• 3:31
  SPEAKER_00: So I think it's fair to agree that it's bad to partner with a malaligned partner.
• 3:37
  SPEAKER_00: It's also not good to set up a partnership that doesn't have the right structure.
• 3:41
  SPEAKER_00: And those are the two things.
• 3:42
  SPEAKER_00: These are the two issues that often people run into.
• 3:45
  SPEAKER_00: It's the person and the structure of the business.
• 3:48
  SPEAKER_00: Which means the question could be reformatted from whether to take on a partner.
• 3:54
  SPEAKER_00: Instead, the question could be who is the right person to partner with and on what terms.
• 4:00
  SPEAKER_00: So let's go ahead and take them in that order because the person comes first, obviously.
• 4:04
  SPEAKER_00: And no amount of good structure rescues the wrong person.
• 4:08
  SPEAKER_00: I like to start with character.
• 4:10
  SPEAKER_00: Character is the root of everything when it comes to partnering with people or a person.
• 4:15
  SPEAKER_00: And character isn't the same as reputation.
• 4:17
  SPEAKER_00: Oftentimes people confuse those two.
• 4:19
  SPEAKER_00: Reputation is what people in town say about the other person or say about you.
• 4:24
  SPEAKER_00: Character, on the other hand, is what's happening when no one is looking.
• 4:27
  SPEAKER_00: It's how somebody acts when nobody else is around.
• 4:30
  SPEAKER_00: You're trying to understand what your potential partner does on a consistent basis when they're doing the right thing and it costs them something to do the right thing.
• 4:38
  SPEAKER_00: You also want to know what they're like when nobody's watching.
• 4:41
  SPEAKER_00: You're not necessarily interested how well liked they are at the state conference because it doesn't really tell you much about them.
• 4:47
  SPEAKER_00: I like to lean on Stephen Covey's work here.
• 4:49
  SPEAKER_00: I look for three things when it comes to character.
• 4:51
  SPEAKER_00: Number one is integrity.
• 4:53
  SPEAKER_00: Do they actually do what they said they're going to do?
• 4:56
  SPEAKER_00: Not on necessarily the big things, but also on the small ones.
• 4:59
  SPEAKER_00: Did they call back when they said they'd call back?
• 5:01
  SPEAKER_00: Did they get you a completed project on a deadline like they promised?
• 5:05
  SPEAKER_00: Small promises are the perfect test here.
• 5:08
  SPEAKER_00: Basically, it's an easy way to check on integrity without having to go into bigger and deeper avenues on that particular issue.
• 5:15
  SPEAKER_00: The second one is maturity.
• 5:17
  SPEAKER_00: And Covey defines maturity as the intersection between high courage and high consideration.
• 5:23
  SPEAKER_00: High courage is being able to say what matters to you and to do so in times that matter.
• 5:28
  SPEAKER_00: High consideration is actually carrying what matters to the other person.
• 5:32
  SPEAKER_00: You need somebody who can hold both simultaneously.
• 5:34
  SPEAKER_00: You see, high courage without consideration is like strong arming the other person, and you'll have conflict that isn't healthy.
• 5:41
  SPEAKER_00: High consideration without the right amount of courage is like being a doormat.
• 5:46
  SPEAKER_00: And a doormat partner says yes to too many things that they don't necessarily agree to.
• 5:50
  SPEAKER_00: And they usually have resentment at that point and detonate later on.
• 5:54
  SPEAKER_00: So that's not not good either.
• 5:56
  SPEAKER_00: The third thing that we look for in a partnership is abundance mentality.
• 6:00
  SPEAKER_00: This is the one that people can actually easily mock up or even fake.
• 6:04
  SPEAKER_00: Now, abundance mentality is the belief that there's enough for everybody to win.
• 6:08
  SPEAKER_00: And if somebody doesn't really believe that inside of them, they may tell you on the surface that they want you to succeed, but deep down inside, they're going to hold the reins back the entire time.
• 6:18
  SPEAKER_00: They want to make sure that you're never more successful or ahead of them.
• 6:21
  SPEAKER_00: And that doesn't work in a partnership.
• 6:23
  SPEAKER_00: This usually is felt months to even years before you can actually show any evidence of it.
• 6:28
  SPEAKER_00: And it's eroding to the partnership.
• 6:30
  SPEAKER_00: So I recommend with this taking a look at all three of these in line with one another: integrity, maturity, and an abundance mentality.
• 6:39
  SPEAKER_00: Take a look at these in the person that you want to partner with so that you can partner with somebody that actually wants to do business with you and you want to do business with them.
• 6:47
  SPEAKER_00: Another strong piece of advice here is not to partner with somebody who is missing any of these three elements.
• 6:53
  SPEAKER_00: Don't compromise on this.
• 6:54
  SPEAKER_00: For that matter, look at yourself to ensure that you are the type of partner that has these three characteristics at a base level as well.
• 7:01
  SPEAKER_00: And you will always have things that we can work on in these categories, but you have a base level of these three.
• 7:06
  SPEAKER_00: Now, if you're getting value out of this, subscribe.
• 7:09
  SPEAKER_00: There's a new one for PT clinic owners every week.
• 7:12
  SPEAKER_00: And many of these are building on each other's concepts to really simplify business for you.
• 7:17
  SPEAKER_00: So let's actually start to move on to this idea of structure, because the structure of the business is where really good partners can still wreck a good, viable business plan.
• 7:28
  SPEAKER_00: So you've got the right person or persons.
• 7:30
  SPEAKER_00: Now you need to have the right structure.
• 7:32
  SPEAKER_00: Most partnerships in the physical therapy profession actually get this wrong because it can be built on conversations and handshakes and all this other stuff, but they don't understand how to actually bring it to life.
• 7:43
  SPEAKER_00: These can actually be people who trust each other at this point and mean well, but they don't know how to write down what they agreed to in a way that actually serves both of them or all of them if there's more than one or two partners.
• 7:54
  SPEAKER_00: So what often happens in this situation is that as you go into year two or year three of the partnership, one of you may want a second location.
• 8:04
  SPEAKER_00: And one of you actually wants to slow down because of different life experiences that each of you are having.
• 8:10
  SPEAKER_00: So one individual is putting in many, many hours, maybe not effectively, maybe effectively.
• 8:16
  SPEAKER_00: And the other is putting in half of that possibly and wants to go golfing more often.
• 8:20
  SPEAKER_00: But both of you are certain that you're actually holding the weight of the business, but not really sure what your roles are because it was never really defined well or written down.
• 8:29
  SPEAKER_00: This is where I like to have two agreements, a contribution agreement and an operating agreement.
• 8:35
  SPEAKER_00: And these can be in the same agreement.
• 8:36
  SPEAKER_00: We'll talk about that in a moment.
• 8:38
  SPEAKER_00: A contribution agreement needs to be in place before the partnership begins to help really define what results will be and how you're going to measure it and what each of your roles will be.
• 8:48
  SPEAKER_00: It's not like either of you lied to each other, but you didn't write down what you were going to contribute and whose roles you each were going to fill.
• 8:57
  SPEAKER_00: It may cause arguments and tension down the road about what you thought the conversations you had meant years ago.
• 9:04
  SPEAKER_00: Written agreements do something a verbal agreement cannot.
• 9:07
  SPEAKER_00: They create clarity.
• 9:09
  SPEAKER_00: And clarity is what makes a partnership survivable and thrivable, even more importantly.
• 9:14
  SPEAKER_00: I like to say this: if it's written, it's true.
• 9:17
  SPEAKER_00: Or another way to put this is if it's not written, it's not true.
• 9:20
  SPEAKER_00: This is where a contribution agreement alongside the operating agreement is super valuable.
• 9:26
  SPEAKER_00: And this is all about the structure that we're talking about.
• 9:28
  SPEAKER_00: The important part to include inside of a contribution agreement isn't just the roles, but also the results that you're looking for, which would be measured by KPIs, also known as key performance indicators.
• 9:40
  SPEAKER_00: I also like to include in the contribution agreement what the guidelines are, what's out of bounds, what neither one of you does without the other approval, and things that can actually be decided without the other person, because not everything has to be done by consensus.
• 9:55
  SPEAKER_00: And that's important.
• 9:56
  SPEAKER_00: You can stalemate a business if you say that everything has to be done by consensus.
• 10:01
  SPEAKER_00: Make sure that you clarify what needs to be agreed upon by everybody and what needs to be agreed upon by the majority, and so on and so forth.
• 10:07
  SPEAKER_00: Include in the contribution agreement what each of you brings to the table and really list out things such as the initial capital that you're bringing and the general hours that one might be contributing.
• 10:17
  SPEAKER_00: The hours part can be a little bit loose depending on what the results are that you might be applying.
• 10:24
  SPEAKER_00: So I don't get so hung up on the hours so much as the actual results that we're looking for and the relationships that you bring to the table.
• 10:31
  SPEAKER_00: These are the parts that you want in a contribution agreement.
• 10:34
  SPEAKER_00: Many partners and partnerships don't actually lock those in early.
• 10:38
  SPEAKER_00: So it becomes shocking when the person who brings the relationships feels undervalued for that.
• 10:43
  SPEAKER_00: That's where things can go wrong.
• 10:45
  SPEAKER_00: Again, going back to what Dave Ramsey or others have taught from their advice, they teach oftentimes not to partner because you're missing the power of understanding how to find the right person through character and making sure that you have the right structure.
• 11:01
  SPEAKER_00: It's actually quite easy and beautiful to partner when you have those two in place because you can't do everything on your own as well as you think you can.
• 11:10
  SPEAKER_00: In a business, there's so many moving parts.
• 11:13
  SPEAKER_00: One thing I like to say is that you can either fly high with the eagles or you can fly low with the egos.
• 11:19
  SPEAKER_00: So many times when people want to do it on their own, they're trying to tackle everything that they didn't have the talent or the passion for in the first place.
• 11:28
  SPEAKER_00: It really limits them significantly to be present for everything and many things that they just feel as drudgery.
• 11:34
  SPEAKER_00: So it's important to state clearly in the written agreements what accountability looks like in your business and what happens if somebody misses that accountability, because it will happen.
• 11:44
  SPEAKER_00: And it'll happen often just because of the nature of humanity.
• 11:47
  SPEAKER_00: Things get missed sometimes.
• 11:49
  SPEAKER_00: So make sure that you clarify what we do in those situations.
• 11:52
  SPEAKER_00: Inside of the operating agreement, which also is the structure piece of this, it's important to map out what the consequences would be.
• 12:00
  SPEAKER_00: This includes how somebody could exit if they need to, whether it's by willing departure, or if it has to be something that happens based on lack of fulfillment of their part of the agreement.
• 12:11
  SPEAKER_00: Or there could be even extenuating circumstances.
• 12:14
  SPEAKER_00: It's good to have an attorney help you understand what those extenuating circumstances are because you might not see them in the beginning.
• 12:20
  SPEAKER_00: Of course, this video is not made to give you every detail of what to put in an operating or contribution agreement.
• 12:26
  SPEAKER_00: Just remember to list out what happens if somebody needs to exit the partnership and how to protect the business itself from potentially negative outcomes if somebody does leave or doesn't fulfill their part of the agreement.
• 12:38
  SPEAKER_00: So, to recap that, an operating agreement explains a few things and also helps you to build the business without worrying about what happens if things go wrong.
• 12:47
  SPEAKER_00: And then you can do it with a lot of positive energy.
• 12:50
  SPEAKER_00: What an operating agreement does is it shows how the business will operate, how the partners operate in the business, how you might need to exit the business, what constitutes consensus agreements that need to be made for decisions, and what constitutes individual decisions that can actually be made without consensus.
• 13:07
  SPEAKER_00: In a nutshell, a contribution agreement explains a few different things.
• 13:11
  SPEAKER_00: What it does is it tells what each of the partners will bring to the table.
• 13:15
  SPEAKER_00: It'll tell what percentage of ownership they each have, what results they're responsible for, and how much money they might bring to the table.
• 13:23
  SPEAKER_00: So an attorney may help you with this and can decide that the contribution agreement may be included with the operating agreement.
• 13:30
  SPEAKER_00: That's fine.
• 13:31
  SPEAKER_00: It can be one document.
• 13:32
  SPEAKER_00: But I've always done the contribution agreement as a separate agreement just because it doesn't really matter much whether they're together or not.
• 13:40
  SPEAKER_00: That's just how I like to have it, as long as the agreements are signed and understood and they cover those parts that we're talking about.
• 13:46
  SPEAKER_00: So yeah, let that be something that is nuanced based on what your individual needs are.
• 13:51
  SPEAKER_00: So what do you do when you run all of that and you still cannot tell whether this is the right partnership?
• 13:59
  SPEAKER_00: There's a position I've used for years, and I got it from Stephen Covey.
• 14:02
  SPEAKER_00: Yeah, I like Covey's stuff.
• 14:03
  SPEAKER_00: It's so clear and it's so powerful in this case.
• 14:06
  SPEAKER_00: It's called win-win or no-deal.
• 14:08
  SPEAKER_00: Another way I like to put it is win or win bigger.
• 14:11
  SPEAKER_00: Because it's not a no-deal, because it's not working out, it can actually turn out to be a win bigger.
• 14:17
  SPEAKER_00: If it's not a no-deal, then you can just win.
• 14:21
  SPEAKER_00: And either way, you're winning or winning bigger.
• 14:23
  SPEAKER_00: Nothing is really worse than forcing yourself into a partnership that isn't aligned, doesn't have the components that we talked about here from the character as well as the structure.
• 14:31
  SPEAKER_00: And then finding out that it's something that strains you.
• 14:34
  SPEAKER_00: This is why people run away from partnerships and they actually don't need to.
• 14:38
  SPEAKER_00: Partnerships can be one of the greatest ways to develop exactly what you want in your life so that your business revolves around you and not you revolve around your business.
• 14:47
  SPEAKER_00: This particular structure allows you to walk into every one of these conversations, knowing what a win looks like for you and genuinely interested in what a win looks like for them.
• 14:58
  SPEAKER_00: If you can find the version where both of those are true, you got a deal.
• 15:02
  SPEAKER_00: If you can't, it's a no-deal.
• 15:04
  SPEAKER_00: And again, no deal is a completely honorable outcome.
• 15:07
  SPEAKER_00: No one has to lose.
• 15:08
  SPEAKER_00: You just don't go into this business together, and that's it.
• 15:11
  SPEAKER_00: And far, far better that you understand that you're not going into the business together before it starts than later on.
• 15:17
  SPEAKER_00: One question will do most of the work for you, and it's this what does a win look like for you?
• 15:22
  SPEAKER_00: Clarify this explicitly early before there's money moved to the business count from each of you and each of the partners.
• 15:29
  SPEAKER_00: Be sure to ask what a win looks like for each of you in the short and long term, even out to five to ten years.
• 15:36
  SPEAKER_00: Depending on the answer you get, whether it's vague, meaning they haven't really thought through or thought about what a win looks like for them, that can tell you that they're not ready yet.
• 15:45
  SPEAKER_00: Or if it's something you feel you can't live with, you find out for a lot less than if you waited to find out down the road after you started the business.
• 15:53
  SPEAKER_00: So see, asking what a win looks like for each other, short and long term, is key.
• 15:57
  SPEAKER_00: So here's what I would deal with this.
• 15:59
  SPEAKER_00: If somebody's offering you a partnership or you're offering somebody a partnership, stop asking whether partnerships work.
• 16:04
  SPEAKER_00: Take those three character tests, run them on each other over a few weeks on a few small things, then ask what a win looks like for them and listen to the entire answer without trying to sell the idea or being sold on the idea.
• 16:19
  SPEAKER_00: Just be objective about it.
• 16:20
  SPEAKER_00: And if you're sitting there thinking you'll just do the whole thing alone because it's safer than dealing with all this, understand what you're choosing.
• 16:27
  SPEAKER_00: You're choosing a company that can only ever get as big as your capacity.
• 16:32
  SPEAKER_00: One person's capital, you, and one person's blind spots, which are yours.
• 16:37
  SPEAKER_00: Sometimes that may be the right call, but I really want to encourage you to make it on purpose because you looked at it objectively, not because somebody on a podcast or a YouTube channel told you that every partnership sinks.
• 16:51
  SPEAKER_00: That's not true.
• 16:52
  SPEAKER_00: If that helped you to process some of these questions that you've been having about this, subscribe so that you can catch the next one.
• 16:59
  SPEAKER_00: I recommend watching this one next because before you want to hand anybody a piece of your practice, you should actually know what a piece of the practice is actually worth to the person who is going to hold it.
• 17:09
  SPEAKER_00: I'm going to break down every way that owners get paid and provide a link to watch that one next.
• 17:15
  SPEAKER_00: The right partner makes you bigger than you could get on your own.
• 17:19
  SPEAKER_00: And the wrong one costs you valuable time, energy in your life, and potentially a lot of money.
• 17:24
  SPEAKER_00: Be careful about that.
• 17:26
  SPEAKER_00: Who is the person that you want to partner with and be relentless about the structure?
• 17:30
  SPEAKER_00: I'll see you on the next one.