Ross Milroy | Crain's Miami

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Ross Milroy

Background:  

Ross Miami Realty is a boutique residential brokerage firm that caters to buyers and sellers of luxury real estate with personalized serve and advice.

The Mistake:

I made the mistake of entering into a partnership without properly vetting my new business partner.

I had somebody working with me for many years. He had proven himself to me. He seemed honest and hard working. And in order to continue our relationship, he insisted that I make him an equity partner in the business. I was hesitant because I always thought we had a successful relationship together without it, but he had some big ideas about making further investments in our platform, especially our technology platform, which he said we would use to start recruiting a lot of agents. So I reluctantly agreed, and we did our own due diligence of each other.

Although I asked him a lot of questions, I made the mistake of not digging into the details and understanding what was going to come along with his decision to expand our platform. He made certain representations without giving me the full story, and when I would ask him about the success he had with generating new business through developing an online platform, through these platforms, there were no concrete answers.

There was never a discussion about the fact that he had been doing it with Google AdWords, or that he'd been driving it with Pinterest, for example. It was always much more opaque, very situational, like, "I've put together a great platform. I've got great SEO. I've got something people want and they find it."

So I bought into it, and the next thing you know I've got an equity partner and all of his expenses. And that's where the problem started because he didn't disclose all of his expenses to me at the outset. I laid all my cards out and he didn't. So by not asking him to define his plans and assuming I could trust him, I lost.

I approached him and told him the relationship wasn't equitable. He said OK but too bad. He wasn't interested in working things out. So I had to make the decision to leave. It took almost two years to unwind that business, and then I had to build everything all over again.

Vet your people before you go into business with them, even if you think they have proven themselves in the past.

The Lesson:

I'm in sales. I'm a people person, and while I have a business background, I don't know tech. It's a very dynamic field, so I relied on him and that was the big mistake on my part. Take care to vet the people you partner with. Be very diligent about what they represent and look under every nook and cranny because if they don't understand what they're doing, then you won't either.

They could be bringing a bunch of baggage that you don't know about. Vet your people before you go into business with them, even if you think they have proven themselves in the past. It's one thing having them as an independent contractor or employee. It's another thing having them as a partner.

Stay in touch with Ross Miami Realty on Twitter @RossMiamiRealty.

Photo courtesy of Ross Milroy

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