Choosing a Business Partner | May Markets & Compound Interest

Choosing a Business Partner

Outside of who you marry, the most significant financial decision you’ll ever make is with whom you go into business.

We’re consistently encouraging those in our networks to think slowly and soberly about who and what they’re committing to with a business partner. Here are a few that we walk through when the conversation comes up:

What new value does the partnership create? Is this 1+1=3?
What could go wrong?
What legal documents should be in place?
What do governance, communication, and transparency look like?
What happens if your business partner gets divorced?
What happens when there’s disclosed addiction?
What about all the other messiness of life?

Let’s just assume: People are messy. Relationships are messy. Money is messy.

So how do we approach this wisely and find healthy alignment?

With the right team – Legal, financial, and advisory experts.
With the right process – Clear expectations, due diligence, and structured agreements.
With the right documents – Protections that safeguard both parties.

If you’re at the outset of a new venture, know this, the who is far more important than the HOW no matter what the resulting service or product will be.

Please feel free to reach out when considering inviting other partners into a new or existing business venture. We’ve learned valuable lessons from our clients as well as our own business repeatedly.

May & the Markets: If you’ve invested in the stock market for any length of time, it comes as no surprise that there can be a somewhat regular yearly cadence. You’ll begin hearing the media talk about how the coming months are historically not the best. However, it’s May and where does that leave us? Historically, post-election years tend to be strong, up 1.6% on average, which is the 4th best month of the year in a post-election year.

Compound Interest: Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is only calculated on the principal, compound interest grows faster over time because interest is earned on interest. This makes it a powerful tool for long-term investing or saving.

Albert Einstein referred to compounding as the “8th wonder of the world.” We couldn’t agree more. The problem is that humans aren’t wired to think exponentially. We often settle for short-sighted, linear thinking. As Morgan Housel says, “Compounding doesn’t rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time—especially in times of chaos and havoc—will always win.” Keywords = uninterrupted for the longest period of time. Stay invested for long-term gain!

Smartphones in Schools: A recent national survey ordered by Rachel de Souza, the children’s commissioner for England, revealed that nearly all elementary (99.8%) and middle (90%) schools in the UK have instituted some form of a ban on smartphones in the classroom. One headteacher commented, “A lot of this is about a battle for attention, a battle for focus and concentration. It’s not just about having your phone out and using it, it’s the mere presence of the phone.”

Some U.S. states have begun to follow suit, albeit slowly. Delaware, Pennsylvania, and Arkansas governments have allocated grant money to any school wanting to use secure boxes or pouches to store devices during the school day. Florida and California have already passed prohibitions that will be enacted next school year. Several other states are considering how to approach it.

This recent article from Anxious Generation author Jonathan Haidt, along with Zach Rausch, provides a little more color on the current problem our children are facing. His principles are simple. This is an ongoing issue worth our attention as our kids (and the parents!) struggle to figure out what’s best.

*The views expressed represent the opinions of Compass Ion Advisors, LLC, as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, an investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website at https://adviserinfo.sec.gov/firm/summary/166418. Past performance is not a guarantee of future results.