Why Most Business Partnerships Don’t Work

business partners

Finding a business partner may seem hard, but finding your rhythm with your business partner is much harder.

Although I’ve worked with the same business partner for over ten years now, it took us a few years to find our rhythm. Sure, things are great between us, and both of us are extremely happy, but it wasn’t easy for us to get to where we are today.

I watched many other business partners try to work it out together, but in most cases they fail. It’s not because of hard work, money or their smarts… it’s because they are afraid of the following:

Reason #1: Confrontation

People are afraid to confront one and another. I don’t know why, but this is the number one reason my business partner and I do so well with each other. If we feel that either of us is screwing up, we call each other on it.

We don’t care if we hurt each other’s feelings. We say what is on our minds. Why? Because we both want to succeed and do what is best for the business. So if one of us is holding back the business or doing something wrong, we make sure we point it out.

If you are too afraid to tell your business partner how you feel, you won’t be able to make your partnership work.

Reason #2: Communication

Without communication, nothing is going to get done. Not only should you and your partner communicate on a regular basis, but you should over-communicate.

Talk with each other on a regular basis, find problems within the company and try to solve them together.

What I’ve learned is that excessive communication also helps keep both of you motivated. You will come up with ideas, get excited about what you are doing and have fun working together.

Reason #3: Roles

You and your partner shouldn’t be doing the same thing within the company, especially when you are starting out. You won’t have enough cash to hire other people, so you need to focus on solving different problems.

In other words, you need to divide and conquer. Typically, my business partner deals with product and engineering, and I deal with all things related to revenue. Where we overlap is in the area of marketing and strategy.

Make sure you clearly define who is going to work on what so you aren’t stepping on each other’s toes.

Reason #4: Time

You can’t expect to create a perfect partnership within a few weeks, months or even a year. It will take you at least a few years to figure out how each of you works and to evolve into your roles.

You will also realize that things change over time. When I first started working with my business partner, I was the technical one, and he was the business guy. Today, we both understand business really well, but he focuses more on the technical side, while I focus on the business side. In other words, we’ve kind of switched roles.

Time will also heal a lot of problems you are facing. When money is rolling in, things usually aren’t too bad. But when it stops coming in, problems arise. With time, you’ll learn how to work things out and create a happy partnership.

Reason #5: Life goals

Although personal life goals shouldn’t affect a partnership, they actually do. If your goal is to live a relaxed lifestyle on the beach while your partner wants to work seven days a week in the office, things aren’t going to work out.

One of you will feel that the other isn’t pulling his or her weight, and it will eventually create a lot of problems.

If your goals in life are aligned with your partner’s, it will help keep the peace. The reason my partner and I do so well together is because we both love working seven days a week, and all we want to do is build a big business. Neither of us has any other hobbies in life, other than our business.

Before you partner up with anyone, make sure you have similar life goals… especially when it comes to work.

Reason #6: Friendship

You may disagree with me on this one, but your business partner shouldn’t be your best friend. You need time apart, and you need to have your own group of friends. If you are with your partner every single day, eventually you will get sick of hanging around him/her.

You want to have your own circle of friends because it will give you more space. Plus, it will help you improve the business because your business partner will learn different things from his/her friends versus what you learn from yours.

You can then combine the knowledge you’ve both gained and work on growing your business.

Reason #7: Execution

I’ve found that some partners love to talk to each other and strategize on a daily basis. But they lack in one thing: execution. If neither of you can execute, things won’t work out long-term.

Focus your time and energy on getting stuff done because you need to feel like there is a sense of accomplishment. If you don’t, you will start pointing fingers at each other.

Reason #8: Emotions

Emotions tend to get the best of all of us. When someone calls you out or places blame on you, it is natural for you to argue and fight back.

You can’t get emotional with your business partner; you need to be logical. When something is wrong, take a step back and look at it from an outsider’s perspective. Figure out what the logical response would be and take that approach.

At the end of the day you both will do what you feel is best for the company, so there is no need to get emotional. Emotions won’t help you accomplish your goals; they will just cloud your judgment.

Conclusion

I hope one day you’ll be able to find as great of a business partner as I’ve found. Sure, things won’t be perfect when you are starting out, but if you give it a few years and work through the things I mentioned above, you will be able to create a happy partnership.

So, for what other reasons do most business partnerships fail?

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Comments

  1. Hi Neil

    Interesting subject and a contentious one. A few years ago when I used to work as a small business consultant if I was ever asked about partnering up, I always advised against it. I saw too many partnerships fall apart in acrimony and long-standing friendships get torn apart.
    Also a lot of my time was spent mediating between partners of existing businesses. They can work well, as you are proving, but just like a marriage it takes a lot of thought and time to get it right.
    Ultimately, if there was choice, I’d always go solo.
    Andrew

    • Andrew, great tips. That’s why it’s so essential to vet a business partner before things go awry. The solo route is also good, but they you will have a resource issue.

    • Thanks for these tips Neil. Everything in partnerships is all about building or having sound relationships.

      • Neil –

        Good stuff! I thought your first two points of Conflict and Communication were especially pertinent, not just for business partnerships but for all relationships. If one is not willing to confront and communicate, things will pile up under the surface until it erupts.

        I recently wrote a post “6 Questions to Answer before Entering into a Business Partnership” in case you’re interested… THanks again!

        • Thanks Niel for sharing your story. That is very helpful!

          Hi Ryan,
          I read your article and found out about what you are doing.
          I hope one day I will be able to get service from you.

          Thanks
          Lani

  2. I have had a number of business-partners in my life, and now I am sure that you must to make any business along, without partners. The more business, the more problems with partner.

  3. Neil, for gods sake stop with the pop-ups! I get it, we like your stuff but dude, it’s really annoying when I have to pass through 10 pop-ups to finish reading a post on your website.

  4. ….and no matter who you bring in as a partner keep only your name on the bank account and be the only one authorized to sign checks.

    (Advice I took from Oprah after my first partner was stealing money.)

  5. Point no 6 is very true . Me and my business partner have made sure that we have different set of friends ( although we share a same friends circle also ). It get annoying to keep talking to the same person over a long period of time and see him wherever you are.

  6. I am starting a project and looking for a partner these days. Thanks Neil for these useful tips.

  7. Hey Neil,

    Obviously to a large extent, most of the points, you’ve sighted are extremely vital for business success. and I’m equally happy that you’ve a partner you can always count on day in day out. but you didn’t reveal his name herein? as some of us might be curious to know him.

  8. Great article Neil. I always feel that for any relation , most important thing is conversation. And for doing business together , many other things are required. Some points most of us need to read.

  9. Great post, Neil.

    My business partner is my best mate – we’ve been working together now for a good few years while living in the same apartment for the past 15 months and it’s going really well. So I’m on the fence as to how important your #6 is.

    I’ve had some partnerships that failed in the past too, though, and I wholeheartedly agree with the point about “life goals”. That was the main downfall with the partnerships that failed.

  10. Niel, you forgot to mention the most important thing of all. Trust and Loyalty. Without those it will certainly fail. As Vi stated, unless trust is implicit then forget it.

  11. Really nice post Neil. Amazing points and true scenario of current partnerships. :) Improving this aspects will help us to co-operate in business.

  12. Hey Neil,

    Thanks for the article. I agree with every point you made here.. Except you missed out on one part that is a constant issue with me: money.

    If you’re starting up a partnership the issue of money needs to be an open conversation. You’ve got to track who gave what when, you will give, how revenue is split, etc. Right off the bat!

  13. Neil, you have write something I just wanted to hear. I’m in one partnership now and its a long one. Rythim is hard, I just confront him of something, the comment were like, I’m being to straight. The roles thing there we are still, … go figure. :)

  14. Number one reason is lack of trust. Never do business with anyone you can’t trust. Sounds simple but still overlooked.

  15. Thanks Neil for this blog post; it hit home from me especially now that I have a new startup with co-founders.

    Cheers!

  16. Neil, great blog post. Having had a number of partners in different businesses I would put #5, Life Goals, at the top of the list. While communication is always a critical success factor, in the long term (hopefully long term is the goal…) finding someone with the same motivations, business and life goals is key. If these are not aligned the partnership can’t / won’t last.

  17. I think direction in the sense of one’s goal is major to the success of any partnership. If both partner does not share this common goal thinks won’t workout.

  18. A very successful seasoned serial entrepreneur once gave me a piece of advice for any venture – don’t take on partners (keep sole ownership) and don’t take on any loans to grows the business.

    I personally like having sole / full control of where my company goes and keeping 100% of the profits. I can’t think of any function that a co-founder or partner would do that the right employee can’t.

    • @Artem – One thing an employee can’t give you is being able to be completely 100% honest and express frustrations/vent about the business.

      Having a good partner means someone else who has your back and is there in good times and bad, and you can rely on 100% to do what’s best for the company.

    • Artem, that’s a good additional point. You should be very mindful of money.

  19. Hi Neil,

    It was an interesting read especially for someone like me who after working many years with corporates decided to start something my own. Although it’s being only months for me working independently but I realized I’ll need a partner to grow my business!

    Finding a good business partner is like a marriage if you get the right one, your business will grow and flourish like a successful marriage and live happily thereafter!

    I’m sure I’ll find the right business partner soon and will make sure to follow your advice, guidance!!!

    Thanks again for your sharing your practical experience with us as always. Your articles provide us with practice advices which is hard to find anywhere :-)

    • Glad I could help. I think it’s important to remember partnerships aren’t for everyone, but if you do decide to join one make sure you have all the angles covered.

  20. Totally agree with #6 Neil!

    My co-founder Chris and I spend a lot of time together, and it’s really important that we have our own friend groups. We both get inspiration from different people, and often after a day or even a few hours with friends we have a new perspective on our next challenge and come back charged n’ ready to go.

  21. Neil good post!
    I think one of the reasons a partnership can fail is because both partners have the same skill set. I think it is important to find a partner that is your opposite.

  22. I completely agree with your points. In my experience, a lack of definition and communication in any relationship accelerates failure. As David Ramsey says, “The only ship that won’t sail is a partnership.” I believe the best partnerships are the ones where responsibilities are defined and accountability is encouraged! Thanks for sharing your experiences with us!

  23. I couldn’t agree more on all points, even the “friends” one. I have an amazing business partner who I am close with personally and who I trust and respect professionally.

    However, we do not hang out of the weekends or evenings most nights. We each have our own lives and that just makes us more happy to be around each other outside of work when we have a chance to.

  24. Great tips. I had a partner and we started an online project together. We planned together and when I was going to developers and getting things ready, he was just away for all that and he left me alone on dealing with developers and I alone was dealing with the technical side. Finally we sat together and I asked about the situation and debate became aggressive and he just left. I returned his investment on his demand and that project just could not be executed. I could not find another partner and I had other things to do.

  25. Beatrix Willius :

    Great article. Could also be on marriage councelling.

    +1 for the popups – majorly annoying!

  26. Venkatesh iyer :

    I ruined one of the most precious friendships of my life with two other soul mates because of partnership issues. My role was substantial – I did not communicate when I should have. It is a regret I will carry forever.

  27. Fantastic article, very useful tips and very inspirational! It would be great if there was a continuation of this article especially with some examples of different business partners. My business partner is also my husband and I have family members that work together.

    There are lots of pros and cons for both types of partnerships but ultimately it is always about trust and ethos if these are aligned then it’s a good foundation!

  28. Hey Neil, excellent article. You have pointed out quite a few things that we tend to ignore – communication, personal goals and emotions. People are usually not comfortable discussing or even thinking about how their personal feelings affect business decisions. Unless you are Vulcan, everything we do has an emotional basis to it! We use logic to justify our emotions. And I think that’s perfectly fine, But business partners should be more aware about their own emotions and how emotions affect relationships and decisions. And to tell your partner how you feel,(as you stated in reason #1), you first have to be more aware.

  29. As with any relationship in life you’re always going to have problems at some point, and business failings are much the same as in all areas. People fall out and it can all get very bitter and acrimonious, especially if a business is going through a rough patch. So it really has to be a magic formula, like the Innocent guys (who made the smoothie drinks here in the UK) who have gone from strength to strength thanks to a quirky advertising campaign and inner harmony.

  30. Co-founders are nothing less than a Spouse in life. Couples disagree and when they make up, magic happens. So is the case with co-founders. The more they agree to disagree, more thought process goes in to action and the end result is nothing but an awesome decision by both the founders for good of the business. The only thing co-founders should have in mind is that whether they agree, disagree, do that & this, the end beneficiary should be the business and its people.

    One more great post Neil. Cheers!

  31. Hey Neil, its really a gr8 stuff you have provided. You are really an allrounder guy, let it be technical, managerial or now business view. Thanks for your help.

  32. Hi Neil,

    I really enjoyed reading your post. I prefer working alone rather than having a partner. It’s just what I like it. I love working alone just the way Tony Stark a.k.a Iron man work in his lab. hehehe.

    By the way the post is very motivating.

    Thanks,
    Amrik Virdi

  33. Hola Neil,

    Sinceramente tengo que agradecerte de que existas, porque el valor del contenido que ofreces es incalculable y mucha gente no lo valora, por otra parte sobre tu artículo de los Socios, es difícil siempre estar plenamente de acuerdo y en todo con los socios, es difícil con la misma familia como no con ellos pero creo que hay un punto muy importante a tomar en cuenta y es la confianza y el respeto del uno por el otro, aunque puede llegar un momento en que la relación se tense y es normal, aunque no nos parezca bien en ese momento y nos de ganas de desaparecer, pero como tu dices tantos años juntos, no siempre todo va a ser la gloria y más en los negocios, en mi opinión si es un gran amigo y significa mucho para ti creo que llegar a un punto de inflexión sobre la paz y la comprensión mutua sería algo genial para seguir adelante con todo lo demás, cada ser humano es diferente del otro y por mucho amor que sintamos el uno por el otro, es muy raro que siempre deseéis lo mismo es casi imposible, habrán cosas en común pero no todo en la vida y hay es donde creo hay que trabajar para llegar a un buen acuerdo, lo más importante en una sociedad es que esta esté muy sana desde todos los ámbitos tantos personal como profesional desde un principio y sobre todo que sea transparente esto forjará un lazo inrompible en el futuro que ayudará a que crezca sin parar con grandes progresos y triunfos que al fin y al cabo es el objetivo de la sociedad y si ya añadido tienes buenos y grandes amigos dentro, con más razón para cuidarla y mantenerla en buen estado de salud y como tu bien dices hacer de la sociedad una sociedad feliz.

    Yo personalmente te deseo lo mejor con tus socios y para tu sociedad también,valoro enormemente lo que haces y admiro tu trabajo yo espero algún día poder llegar lejos y tener grandes éxitos como usted, es una de mis fuentes de inspiración y espero aprender todo lo que enseña.

    Un saludo
    Esti

    • Thumbs up for posting a Spanish comment in a non-Spanish community!

      No, seriously, just joking.

      Personally, I think the largest issue is with inception…I’m not sure I’m in a position to say this, since I’m flying solo myself, but while I completely agree with Neil here (especially on #7: Execution), I think the largest issue lies in how we find business partners in the first place.

      By convention, I think that we all tend to reach out in our “familiar zone”, which includes people we know, and as we all know, friends, family, colleagues might be really good people, but can make lousy, lousy work partners. I think we can all relate to the experience of having really, really good friends we can hang out with all day but can’t mingle well when working together.

      And I can only imagine the amount of time you’d need to go through enough up’s and down’s to accurately determine whether your current partner is the right fit for you or not. This is one of those times when details matter, because the co-operation, I think, has to be observed under a sustained period of time, and not just success in individual cases.

      This reminds me of something I recently learnt to do when testing market viability – spending maybe $10 – 20 on doing an AdWords test (extrapolation a small data sample…credits to Steven Clayton!) to estimating whether you’ll be profitable based on the volume, avg CPC and conversions. Doing so can save you from the possibility of wasting time and money invested into a project.

      Just wanted to share my thoughts from the perspective of five years of studying astrology (essentially, people) under our master – you can almost NEVER guess what people are like if you don’t direct your focus to looking.

      If only we can do an AdWords test for partnerships as well. :)

  34. I am afraid you are right about the points…

    There are many confrontations between partners that i have witnessed so far.. Including mine too..

    Making your work ethics clear is most important..

  35. Thanks for posting. This topic is so near and dear to my heart that I wrote two books about it. Partnership or Partnersh*t: You Decide and the Workbook delve deeply into the strategy of building a healthy business partnership. Yes, it’s a strategy, just like your financial, marketing, tech and legal strategies. Most don’t understand that, to the dire detriment of the partnership and the business.

    I lost my partnership and business and the fallout was absolute hell—financial, emotional, social, psychological and so on. Instead of just walking away angry and shut down, I instead made it my mission to find out why partnerships crash and burn. What I discovered was life-changing.

    Co-owner failure boils down to
    1. Not knowing yourself;
    2. Not being accountable; and
    3. Not taking the time to get to deeply know your partner.

    Partnership failure is an $8 billion disaster in the US alone. Can we afford that? ‘Tho I was badly burned, I still believe a great partner is a huge business asset and probably the most overlooked secret weapon in your business. Building a great partnership creates the rock-solid human foundation upon which your business will depend, in good times and bad.

    Take a look at ahumanfoundation.com for more info. This work is my mission and if I can help one partnership survive and thrive, then I have accomplished my goal.

  36. I feel like this article works as great advice for a marriage too!

    Jokes aside, this is good stuff. Partnerships can be enticing because you won’t be starting from the bottom alone – but they do bring up many complications that need to be accounted for.

  37. Sorry but I don’t agree. If you find a correct person to do a business you can be really successful. There maybe issues like in any other parts on life but thats normal.

  38. Hi Niel,
    I never trust Partnership, once I had a partnership with my college friend and our business was running smoothly then suddenly he changed his mind and we lost everything, we cant handle partnerships different minds follow different approaches and that make differences between two partners.

  39. Well I am lucky in this case that I am doing work alone since working alone helps avoid all the above points

  40. Great post Neil! As they say; If you want to go Fast, go alone. If you want to go Far, go together.

    In my opinion, in many cases 2 minds are a lot better than 1. A good partnership will always end up being profitable, while having a bad partnership will only slow YOU down.

    I Enjoyed reading your posts, Neil!

  41. Different Life Goal and Poor Communication are the main reason in business partnership. Same happened with me too.

  42. I would say that friendship may even be higher on that list for many people. I cannot even begin to tell you how many times I have personally seen this happen. Sometimes it can be hard to avoid, but it is an important skill to have.

  43. Hi Neil,
    I definitely agree with you when you say business partners should not be your best friends. I had a partnership with one of my friend which did not work out because of too many ego problems. I think one should keep friends as friends, from my experience a business partner can become your good friend but a good friend may not be a good business partner because the expectations are too high from both side.

  44. Do you really think that best friends don’t make a good partnership?

  45. Another great piece of writing. Learn lots of new things from the post. Very soon I and my best friend will start a business. Hopw we’ll get success.

  46. I have tried a few business with partners before but it never worked out when it was 50/50. Then I tried some joint ventures where he took a specific action in my project and he was rewarded well for that.

    I think you missed a point – may be because it didn’t cross your mind – most business partnerships fail because of lack of trust in each other. Sometimes people really get selfish and try to gain which brings down the partnership crumbling down like a house of cards.

    And what is your idea about businesses where there are 3 or more partners? I think it becomes exponentially more difficult to succeed with more people in the partnership :)

    • Deepak, great points. Sometimes partnerships work best. I think if you have 3 or more people and expectations are set at the beginning the road to success is paved.

  47. It’s also important that each partner clearly understands the level of time/effort investment into the business. Many business relationships fail because one person feels like they’re doing more than the other.

  48. Most of the times partnership broke when business starts growing.. And this it the saddest past..

  49. Well, it goes without saying, but trust is something that keeps great partnerships great and horrible partnerships horrible. Surprised to not see trust on this list.

  50. Great article Neil and excellent points. In answer to your closing question, about other reasons partnerships fail, is the sad story of some sort of imbalance. Perhaps, one partner feels the other isn’t putting in enough effort. Perhaps people’s agendas or family commitments change and their focus moves away from the business. Perhaps greed steps up, and one person uses their competitive advantage to manoeuvre to other person out of control of the business – It does happen!!! It’s important to document or record roles, relationships and expectations as your business grows and develops, kinda like a pre-nup or a marriage contract. It’s not necessarily, something people want to do in the early stages, not it sure helps later on, if the relationship starts to sour because of expectations that haven’t been addressed and talked about frankly.

    • Jenna, great points! I think the analogy to a marriage is very appropriate. It’s all about putting the time in and making sure there is compromise.

  51. interesting subject . nice post its very true . thanks

  52. I have been there. My relations with my friend got real sour because of this partnership things.
    Anyways, great post Neil. You summed up all the reasons.

  53. Tanvir,
    Thanks for the kind words. Great point, trust is essential!

  54. Really good article, forming a business partnership is not the easiest thing to do!

  55. Interesting. Apart from above point, i would look for a partner with passion and attitude.

  56. Great post, I agree with you! We know and understand how hard is to find a good business partner. Thanks for your post.

  57. Hey Neil, great post with a lot of knowledge. I would add another thing on this list about motivation, life goals. What i have discovered with the person i tried to do business with in the past, is that his motivation was only money while i focused more on things that we could do to make an impact for other people.

    Also politics can make any business partnership to not go that well.

    Thank you for sharing your knowledge with us.

  58. Neil –

    At the end of the day I’d much rather be in business with a good match as a partner than be solo. Greatness doesn’t come overnight, it’s built over time.

    You’ve brought up great points that most people backburner because their idea is so “great” or they just need to get the business going.

    What I’ve scratched on paper for myself is a business partner checklist. There are some absolutes, and some nice to haves. I just have to get off my duff and publish it. Great post, I’ve been meaning to post a thought but I’d been technologically disconnected :).

    Keep up the great work.

    • Samuel, great points. One should always know what they want in a business partner. If things don’t work out then you are definitely headed towards a sticky situation.

  59. that true its difficult to find a right business partner, some tips to make a business partnership successful, you need to a have a good idea of the work required to make it successful.

  60. I am a partner in an accounting firm. Seven years ago I ventured into a foreign country and have an established practice. I entered into business arrangement with other individuals. Other partners of the firm have declined to come to this foreign country either to support me in my practice or do business. I declare income and pay taxes in this foreign country.
    My partners are claiming share in profits and percentage of gross turnover (fee and reimbursable). Since they did not associate with me in the foreign country do have the right to claim shares of profit or income from me? We had oral understanding that only myself would practice in the foreign country.

    Please give your expert advice on the way forward.

    Arvind

  61. The first 2 reasons, Confrontation and Communication are the reasons most partnerships fail and don’t get to a mature stage. Stay clear of people that are afraid to speak their mind openly, they don’t make good partners.

    Just my 2 cents!

  62. Nice post and well explained. thanks so much Neil :)

    Cheers,
    Hamza

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