Raise your hand if you want to get rich!
I certainly do. I always have. Watching my single-parent mother work so hard to provide for me and my brother left quite the impression on me.
It’s not like we ever went hungry. She made sure of that. But I still saw her sacrifice her time, efforts, and comfort far too often. She’s a fighter, so she rolled with the punches as they came, but it still took its toll on her.
That’s how I always knew I wanted more for me and my loved ones.
My mom did a great job instilling strong values in both of her children. I give her so much credit for that. All the same, I guess there’s only so much instruction that really sticks for a kid. Some lessons, you just have to learn firsthand.
Often, you learn them hard way and well after it should have clicked.
Which brings me to my meeting with T. Walt Brashier.
It was about 25 years ago, back when I was still fairly new to the real estate scene. I hadn’t yet made my fortunes, but I knew how much potential there was if I could only tap into it properly.
The right business connections, I knew, could make or break me. In which case, I wasn’t going to settle for anything but the best.
At least that’s what I told myself. The problem was that, at my relatively inexperienced age, I wasn’t necessarily the greatest at defining “the best.”
As I’d learn later on, the trite adage really is true that not all that glitters is gold. Which means that not every wealthy real estate owner makes a great business partner.
You have to be careful – so very, very careful – about who you get into business with.
What Brashier Knew… and I Still Had Yet to Learn
Walt Brashier, for the record, was the real deal. That man truly was solid gold in his business decisions.
As a teenager, he worked at a gas station and a funeral home, and he later became a local church pastor.
A hometown boy, Brashier worked hard and smart to build a local empire as a real estate developer. He was exactly what I wanted to be.
When I went inside his office that day, it didn’t just look like money. With its enormous spaces, red carpet, and opulent decorations, that place smelled like money, too.
I had butterflies in my stomach and dollar signs in my eyes when I sat down in front of him. My speech was all planned out, but I still had to swallow a little harder than usual before I began.
“Mr. Brashier, I’ve got this deal I’d love you to be a part of,” I told him, describing the parcel of land I had in mind. It was perfect for retail development and already had a strong business interested in it. “We could buy it really cheap and then partner to build on it.”
I’ll never forget his response.
“Brad, I like you.” He gave me a genuine smile. “And I love your passion. But I just can’t be partners. I’ve been there, done that, and found I’m better off without that sort of thing. It has nothing to do with you. I just don’t have partners anymore.”
I respected his right to make that decision, of course. However, I can’t say I truly understood it until years and years later… after I’d found a different real estate bigwig to grow with.
Unfortunately, this guy wasn’t nearly such a class act as Brashier. He made it very clear that I was to stay in my lane. I would run the development and tenant management; he would manage all the finances.
And I do mean all of them.
I didn’t have any access to the books whatsoever. Not even a peek.
That’s how he was able to take out multiple mortgages on properties we jointly owned in order to cover his own personal projects. That’s how I didn’t know he was literally bankrupting us and demolishing my reputation. And that’s how it came as a complete shock when all the bills came due – with my name on them.
All because I made a bad partnership call.
Make Sure Management Works for You
It took years for me to dig myself out of the bleak hole my business partner left me in – both financially and reputationally. It was a painful process that taught me exactly why Brashier worked alone.
Business partners have a bad habit of making things worse, not better.
That’s not to say they’re always a bad idea. I’m not as firm on the subject as Brashier was those 25 years ago. But I fully recognize now that you do have to take the time and make the effort to examine each opportunity’s pros and cons.
Thoroughly.
The same is true of investments, which – believe it or not – are essentially the same thing as business partnerships.
Too often, we think of the companies we buy into as completely separate entities from us. But when we buy even a single share of a tradable business, we instantly and legally become partial owners.
While that partial ownership almost never comes with enough influence to change the way the company in question does business… we’re hardly powerless. In fact, when it comes to publicly traded companies, we’ve got so much room and right for transparency.
It’s only a matter of whether we’ll act on it.
We all know the SEC requires companies to release annual, quarterly, and otherwise timely updates about their operations. Their profits. Their buys. Their sells. Their reasons and rationales. Their outlooks.
The whole enchilada.
Behind all of that, of course, is management making all those decisions. Which is why I wrote last Thursday in “My Five Recession Rules” how you need to:
Stick with management teams that boast strong track records and clearly stated goals, complete with smart ways to achieve those goals. Always ask who’s in charge of the businesses you’re interested in. Are they ethical? Are they intelligent? Are they experienced? And are they upfront about what they’re going to do with your money? If not, buyers beware.
In short, do your homework before you tuck your feet beneath a business’ bedsheets – when you lay down with dogs you wake up with fleas.
They literally owe you as a business partner. So make sure they consistently hold up their side of the bargain.
If they don’t, walk away and find someone who will. That’s how you get rich and stay rich in the stock market.
There are no substitutes worth speaking of.
Regards,
Brad Thomas
Editor, Wide Moat Daily
MAILBAG
What qualities do you look for when investing in a company or business partner? Write us at [email protected].