Partners, Not Vendors
We’ve all heard the saying – A good team is greater than the sum of its parts. I totally agree — teamwork is indispensable. Not all teams work well together, but only a well oiled machine can accomplish really big things.
Our commercial real estate work requires a complex machine. Putting together great deals requires input from attorneys, brokers, agents, appraisers, lenders, and more. These roles are often filled by external vendors but, they’re still critical parts of our team. Without them, we would never be able to generate our market beating returns.
Trust is the lubrication that makes a business into a well oiled machine. Building trust takes time, and many vendors don’t measure up. To start a new business relationship, I typically ask for a trial run. If the trial goes poorly, I at least learn how (un)trustworthy the vendor is. If things go well, we can gradually expand the volume, scope, and commitments for future projects. Over time, this turns a vendor into either a trusted partner, or a distant memory.
Building trust also depends on clarity and flexibility. To minimize surprises for everybody, responsibilities and compensation should be clearly defined up front. Vendors who speak plainly about what they will do, when they’ll deliver, and their limitations start off on the right foot. Mistakes and misunderstandings happen, so what I really look for is the willingness to admit an error and correct it quickly. When faced with something unexpected, a truly great long-term partner shows flexibility and focuses first on solving the problem. While it’s important to avoid repeating mistakes, discussions about fault are better left until after the problem is solved.
Of course, trust is a two-way street, and I have to earn it too. I’ve always believed that showing kindness, respect and consideration for the needs of partners is the best way to build a high performance team. Early in my career, I witnessed a vicious cycle when clients made hefty demands on short notice. Vendors felt ill-used, frustrated, and unmotivated, so their work product was poor. This lead to escalating demands from clients and the cycle repeated. In the end, everybody suffered and projects failed needlessly. Just like in personal relationships, paying attention to the needs of business partners is a great way to defuse resentment and boost team performance.
At Alliance, we owe much of our success to external partners who have become integral parts of the team. We didn’t get here by focusing on minimizing costs for each deal. Instead, we’ve consistently focused on value and ensuring that our vendors love working for us. A happy long-term business partner will go out of his way to help get things done. I rest easy knowing that when it comes to crunch time, everybody will do their utmost to get the job done, because they’re committed to the team. This is often the difference between closing a great deal and walking away with nothing but lost time and frustration.
To develop a high performing team, build partnerships with your vendors, rather than transactional relationships. Earn their trust by being clear, reliable, and generous. Ask that they do the same, and build long term relationships with the vendors who measure up. Business partners know that the real value isn’t in one deal, but the steady stream of future deals to come.
Call me at 847-317-0077, email me at [email protected], or tweet me at @benreinberg or @alliancecgc if you can submit us a property to acquire and/or would like to invest with us. For further information on investing with Alliance, please click here.
My Best,
Ben