Anyone got any good stories or real life experiences with successful joint ventures?
I know there are tons of the stories for partnerships and joint ventures gone bad since I heard so many here! But what I like to hear is about the ones that worked out for the best for both parties or even the multiple parties involved. To take it a step deeper while individual partnership stories are okay what I really like to hear is stories about partnerships between businesses (between different corporate entities so to speak).
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A wise man once told me that the only joint venture that makes sense is a purchase order. Remember too that the road to Hell is paved with good intentions.
Most joint ventures start with plenty of good intentions...
Tjk, that wise old man might be a lot poorer because he's such a skeptic.
Most of the real estate that you see today, especially the big stuff is held by more than just indiduals. Joining together is a joint effort allows you to compound your buying power and theres no shortage of success stories. It seem that in here, every man is an island.
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I'm sure anything's possible if enough NY lawyers get involved. On the smaller scales though, there is a lot less certainty. In my little neighborhood, a mid-size builder had a JV with two well-known real estate agents. With eight houses in various states of completion, he filed bankruptcy, left town, and now his lucky venture partners are holding the bag. I started my own business 18 years ago, and if I had a dollar for every time some guy offered to "buy" my company or enter into a JV, I could buy both of us a good steak dinner. Most of the people looking for JVs are pretenders -- they haven't got a pot to pi$$ in, or a window to throw it out of.
Jerrald, probably every one in here is an island. I was waiting to see the success stories but obviuosly they aren't coming.
We've recently negotiated to enter into a joint venture with our LLC as one of the participants. It's not really any more complicated than entering into the agreement as an individual. Whatever name appears on the written aggreement creates the legal bond.
Our decision to approach the other party using our LLC as the vehicle was made simply because there are two principles in our LLC and one principle in the parnering entity. The matter of splitting the liabilites , profits and duties would be too messy to deal with and there wouldn't be any easier way to deal with it than to simply use the existing entities as the "partners".
Is this kind of what you were wondering about?
blue
Warning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
jerrald.. i do joint ventures with friends in the business..
their contact... my estimating /design/employees... i write the contracts, keep the books..
we charge our time equally & overhead based on labor hours, matls, subs..
anything left is split 50/50...... any shortfall is split 50/50...
has always worked out well in every case.. but they don't come along that often..
it takes advantage of the circumstances.. sometimes the scope of labor requirements is too large so the joint venture makes it possible
sometimes our design ability closes the deal... sometimes they are the ones who had the contact..we try to keep it win/win/--- winMike Smith Rhode Island : Design / Build / Repair / Restore
Jerrald, absolutely. I commented on it in a thread the other day about how I was feeling a little amazed / thankful about the whole thing. It got one reply. Anyway -
My friend and I are one such example. Circa three years ago, his game was straight GC. Some commercial, some residential. Good CAD guy as well. He owned about 6 different businesses, playing an almost silent partner in 4 so that he could devote his efforts to the 2 that were newest and needed it most.
I was as I am now to some extent - remodeling, and absolutely 0 interest in going near new construction of any sort. But friends talk, and the grass always looks greener. I looked at him and saw a guy with hordes of success and more leads than I could comprehend. Opportunity knocked daily, it seemed, and he had merely to decide which ones he could open the door to.
I don't know for certain, but he saw something on my side of the fence he liked. I suspect it had to do with the customer relations. I've tried to be the guy that while I'm in your house working, you don't think of me as just a contractor, but as the guy you'd have a cup of coffee with. I develop friendships with a lot of my clients. I'm also like some others here, very hands on. Yes, I could sub things, but I make the effort not to, beyond those that code really mandates (such as plumbing and electrical). I'm picky, perhaps a little too much (did you read the latest JLC?) but I justify it in my head much like the framer in that article did. I know whats right and wrong, whether or not anyone else does. And I have to sleep at night. I think attention to detail is a good thing, and that's the story I'm sticking to.
So I found myself thinking broadening my horizons might not be all bad, and he found himself thinking knowing how to do all these tasks and get on more of a one on one relationship with the client looked AOK.
We discussed how to make our two entities work together without either one of us really losing track of what made us what we were to begin with. We probably discussed variations of that theme for a good year before we really decided to just test it all out. It has worked out great for both of us. I'll try to briefly describe what's changed and why it works.
For me, I have always vastly preferred the interior portions of any job, and trimwork above all else. I've spent some time playing furniture maker, and I put that to use when he asked if I'd like to trim some of the new homes he was building. I get satisfaction out of it because it's far and away my top pick for ways to spend my time. It lets me do something which pretty much suits the persnickity personality, where being concerned with minutae is good and productive. And I didn't have any preconceived notions about "this is how it's always been done" so I did what I wanted and time and again he got boggly eyed and said things like holy cow how'd you do that. Well, I didn't know I was supposed to do something different, so ignorance is bliss.
For him, he's been steering towards a different type of client - one that wants more interaction on the job and one that wants (and will pay some upcharge) for some kind of detailing that is above and beyond "customary". We were both aware that mixing new construction and remodeling has great potentials for disaster, and with a background in each, we're able to advise each other how to keep out of pitfalls. He knows he can't use the same rates to compute a remodel job as he would new. And I know there's an efficiency to new construction that I'll never get on a remodel, and I can price a little differently. (As in, I'm not bidding so high I lose every job).
The particular skill set he has when it comes to hands on work happens to be tilesetting. He can do lots of other stuff, sure, but that's the forte. And man, you ought to see some of it. So on his jobs, I trim. On my jobs, he does tile. And to some extent, that diversity of roles (guy in charge here, guy on kneepads the next day) goes a long ways towards keeping life interesting.
He still focuses on new. I still focus on remodels. We work together when the time, job, and circumstances make it plausable. He has made remodeling available to his enormous client base, and guess who gets to play a major role in all those projects?
It's professional back-scratching, but its a willingness to work together towards a common goal, and a willingness to assume the role that you fill for that project. If he's GC, he's GC. If I am, ditto. We don't backdoor each other on anything, and I have to think that part of why we pull that off is we're both from military backgrounds and learned there the value of a time to lead and a time to follow. There's no ego to get in the way of anything. You just put it all down as a mission. Here's the task, conditions, standards, and we're really just doing what we've grown comfortable with in a previous environment. And we communicate all the time. I know now what jobs are potentials for his business next spring and summer, and vise versa, and we know what role we might be given opportunity to play in that.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
Great post RW. It sounds like two guys blending differnt skills.
Two heads are better than one?
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
Thanks. And, yes, potentially. I'd say the two heads pretty much need to be on the same wavelength inasmuch as what the end result is.
You're just giving me opportunity to blab more. One of the things I used to teach, show, whatever you want to call it, to new guys I happened to be in charge of, was my mentality, which I defined as the sh#t vector. You can draw this on paper pretty easily. Draw a long arrow with a point. End of diagram. Now lets define some stuff about that arrow.
I started by drawing a pickup in the middle. My truck, I'd say. Then I'd draw a little round head in the cab, and a bunch of stick figures hanging out in the bed. The first question to ask of those who listened at all to High School physics is "what's a vector". Well, it's energy directed somewhere. So my vector, stick figures and all, represented our collective energy, all going to one place. The end of the arrow. The mission. I might be steering, but we all were a part of it.
Then I'd draw some flowers out to the side with a stick figure sitting there smelling one. Now what happens when part of the group decides rather than focus their energy on the mission, they want to stop and smell the roses? Well, (keeping with the truck theme) now I draw a lasso from the truck to the person. We have to rope them in. And we've not only lost their energy, we've lost energy from others who have to deal with it. If you're off smelling roses while everyone else is trying to get the mission done, you're in the shi#.
Two heads can be better than one, as long as one of the two isn't off smelling roses while the other is trying to get something done.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
Very nice RW..
please continue.
I like the story. You paint a very vivid picture that is oh-so-true.
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I think we already got to the caboose on that train of thought. I don't really have much more to add. I think new home construction, as an industry, would benefit incredibly if more people thought in terms of mission accomplishment and end result rather than just getting their piece of the pie done quick enough to make a little extra. And yes, there are people out there that do that, but you've been around long enough. It seems more the exception than the rule.
If I could inject a mentality into people (which I will certainly try to, if I ever decide I think I want to build a house) it's think of the next guy and set him up right. I wish every sub walking onto my job got a funny look on their face and said wow, what a nice surprise . . . you know, you frame. So the foundation guy actually got everything completely square. And the tops of the walls aren't rough. And he cleaned up all the leftover concrete. And you almost wonder if he didn't frame before -- the anchor bolts are well placed, none of this right under a corner stuff. And when you leave, the drywaller has to wonder if you hadn't hung rock. I mean, all the studs are actually crowned the same direction, you get the idea.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain