Business Partners: What I've Learned From Partnerships in Pattaya

I've had business partners in several of my businesses, including Pattaya Rent a Car and the Hemingways. Some partnerships have worked brilliantly, and some haven't. Here's what I've learned.

Why take on a partner?

There were three reasons. First, to reduce the risk of starting or investing in a business. Second, when a partner brings skills I don't have. Third, to be able to hand over the baton.

When you own a business, especially a new one, you have to drive it all the time, and that's exhausting. It's good to have someone to bounce ideas off, but also someone you can say to: I need a break, can you drive it for a while until I'm ready to come back?

Why would I rather go it alone now?

Given the choice, I'd now do things on my own, and each of those reasons has changed.

Risk: with experience, I'm better at judging whether a business is risky. If it's so risky I'd need partners to share it, I just don't do it. I move on to the next opportunity.

Money: if I need extra funding, I'd rather borrow and pay interest than give away equity. I also prefer buying existing businesses to starting from scratch, which should mean less risk anyway.

The baton: some past partners said they'd be willing to take over and drive the business, but for different reasons it never happened. Either they weren't capable and hadn't been upfront about it, or they didn't have the drive and were happier for me to do the work while they sat back.

What makes a partnership work?

Everyone understanding their role from the start. At Pattaya Rent a Car, the deal was that my partner would put up the money, because I didn't have any back then, and I would run and grow the business. He agreed to be a silent partner, and he has been. He trusts me to run it, and it's worked because we both understood our roles from day one.

The problems I've had elsewhere came when that original agreement didn't play out: a partner agreed to be silent but then wanted to be more involved, or wanted to be involved and then went quiet.

The most important quality in a partner, for me, is being reasonable. Someone who can put their views across but also understand yours, and accept that you may be in a different position, financially, in life, or in the information you have. It should be a discussion between two reasonable people working towards the same goal. With that, you can get through almost anything business throws at you. With someone stubborn and unwilling to bend, you get friction and real problems.

Do I put it in writing?

Absolutely. My first partnership agreement was fairly loose and general. Over the years, as things came up, I've added clauses.

When I set up the partnership for Hemingways Pattaya, the final clause made it very clear that the business is a risk with no guarantees. Past income is an indication of future income, but no promise. I'd shared all the information I had, to the best of my knowledge, and it was up to the investors to do their own due diligence before putting their money in.

How do partners exit?

Our agreements have an exit clause that works in stages. If you want out, you first offer your shares to the existing partners. If they don't want them, you can sell to an outsider whom the partners approve. If that doesn't happen, you can sell on the open market and the partners have to accept the new person. The price is normally set by an independent valuation.

People have exited, including one partner from Hemingways Pattaya, and I've exited businesses myself a few times. Everyone always has a way out.

My best advice

Don't automatically split it equally: 50-50 because there are two of you, or a third each because there are three. I think that's the biggest mistake people make, and you see it all the time.

Someone has to have the majority and be in control, and for me that has to be the person actually driving the business. A silent partner can't have the majority, even if they've put up all the money. It just doesn't work.

And put a contract in writing. Think through all the scenarios that might come up, write them down, and include an exit clause. In Thailand there are also rules on how much of a company foreigners can own, so get a Thai lawyer to structure it properly. I've covered that in starting or buying a business in Pattaya.

For more, read how I run seven businesses and how my businesses got through COVID.