Working with employees is one thing, but working with co-owners, co-founders, or partners is something else entirely.
For starters, the latter are people who should be as invested as you are, if not more. And ultimately, all of you should have the same ambition: to see the small business succeed. So how does one optimize collaborations, partnerships, management, and team strategies?
– DEALING WITH THE MAIN (WO)MEN –
There are numerous aspects to consider before starting a partnership or co-founding a business. And these have to be taken into account before launching your business because it’s likely too late afterwards. We have compiled a short list of useful guides to help you in making a decision:
– Partnership Basics: A quick and simple crash course.
– FAQs on co-founders; everything you always wanted to know.
– How many business partners should you have? Maybe zero. Should you have any at all?
– How and where to find the perfect business partner.
– Six things you need to know before you say “I do” to a partnership.
– An essential: creating a business partnership agreement.
General things to keep in mind include: personal liability & partnership taxes, co-founder equity, reliability & honesty risks, decision-making, and management duties.
“Especially when you’re growing an existing business, you want the planning process to pull your team together, develop commitment, and accountability.”
Here are specific steps to achieve this:
- Hold an annual strategy review process with your key team members. The main focus of these sessions is the SWOT analysis. Assess the SWOT results, make notes, revisit strategies that are not working, refine the SWOT, and – of course – examine each person’s responsibilities and performances.
- Keep everyone working on actionable and measurable tactics and programs. Merge these contributions into a plan. Evaluate the plan in terms of long-term viability, business growth, and priorities. Let the owner(s) have the final say.
- Share the plan, track subsequent results, hold managers accountable, and give credit for positive outcomes.
- Schedule regular implementation and plan review meetings; specifically note the dates and stick to these.
These are general tips for handling conflict amongst management:
- Think about their perspective. No, believe it or not, this is not as obvious as it sounds. You might be so sure that you are right, but your partner will feel the same way about their opinion. Acknowledge them and examine their viewpoint to see if it has any alignment with yours. Listen to their argument carefully to determine if there are any problems which your solution can address.
- Take another look at your opinion. Ask your partner for criticism – perhaps there is something you left unclear, which caused a misunderstanding. See if you can resolve any reservations he/she might have about your proposal, right then and there. This will also show that you value their feedback.
- Consult a third party. If you and you partner(s) still reach a stalemate on a serious issue, try to avoid going to court or anything as severe. To save time, money, and – if possible – the relationship, allow for mediation/arbitration in your partnership agreement. Perhaps involve an investor, advisor, or a mutual respected friend.
Cutting someone loose (or walking away yourself)
If it’s the last straw, consider the following:
- Firing – if one founder is corrupt and/or not contributing, not working, or not doing whatever else you agreed to.
- Letting go – if the relationship is beyond repair and if the work environment has become toxic.
- Ending the partnership – if one person leaves the company, the partnership will be dissolved.
- Selling out to a partner – the best thing to do is to hire a business expert (attorney, accountant, or a reputable consultant) to calculate a fair value that will leave neither end feeling shortchanged.
To facilitate all of the above, create a buy-sell agreement before starting the business, as part of the partnership agreement. This agreement should plan for a partner’s retirement, death, disability, and unresolvable conflicts.
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There’s no hard list of rules that applies to all businesses; each partnership/co-ownership is unique. It could be with your best friend, someone you’ve met fairly recently, a family member, or your spouse. The most important thing is that your trust each other.
It’s crucial that you’re fully aware of what you’re getting yourself into when you form a business alliance with somebody. And if things turn sour, ask yourself whether it’s something worth destroying the relationship over.
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Advice/resolutions for real-life scenarios:
> How not to divide ownership
> Ask the expert – sweat equity
> Is this partner arrangement fair?
> What to Look For in a Business Partner
> Arguing with partners over compensation
> Lessons Learned: How Choosing the Wrong Partner Cost One Entrepreneur Her Business