“Let’s Stay Together” — Business Partners are a Marriage of a Different Kind
Founding a company is no small thing. Being a maverick, incapable of being a rank and file minion is not in your DNA (deoxyribonucleic acid — to the science folks). That microscopic double helix design impels you to explore a different life path. There are myriad stories of young companies hitting the heights of success quickly, being “canonized” by a generation. Somehow the message is lost, all the long hours, “in the trenches” action, the count of failed iterations before monumental success is often left out of the romantic tale of phenomenal results.
It’s better that way. When the majority of the aspiring business owners map a well-lit path, it gives room for the those who understand the reality of the grind. The daily ups and downs of creating a brand worthy of “household name” status. OK, let’s move past the vigor required to captain a fledgling enterprise in the vast ocean of commerce. What next?
A storm can arise out of what is a calm sea. The parallels in the business world to a raging storm capable of sinking the sturdiest of craft is well documented. A profitable business isn’t impervious to all crises. Namely internal strife. A partnership in business is its own beast. We don’t usually treat a business partner like a romantic relationship, unless you are a “dream team” joined by kismet. For the majority of us, we work side by side with our co-owners. Keeping the lines of communication open and maintained is the foundation of all successful enterprises. Being entwined with your business partner is a legal matter. Like a marriage, a shared ownership is treated by a set of laws defining the rules of engagement and to answer any disputes over the period of partnership, whether it is six months or sixty years.
In the beginning stages, there is typically little to no consideration for the long term. The leadership partners are naturally engaged in making the vision profitable. A smart action to laser focus on, profitability. What is often missing is an agreement with all partners how to navigate an unforeseen deficit within the organization. It’s totally natural to focus on the bottom line, growth and all the micro steps planned and unplanned. It is equally important to discover through conversation amongst leadership who and how a key member of the team gone missing is managed. The absence might be voluntary, a vacation, sabbatical or involuntary, illness, or something more grievous.
We don’t go into a new business thinking it will be derailed by a quitter or the comically gruesome phrase, “getting hit by a bus”. What happens when a key person is incapable of managing their responsibility? There is a methodical way to answer such a queer question:
Define the following:
Who is an important, valuable person to the operation? It usually is the owners, a technically skilled person or an investor to name common persons.
How much will it cost to replace a key person? The cost may be employing a hiring firm to scout for a replacement, and they won’t do it for free. Then, incentivizing the new hire to uproot from their current employment to work with you. Hiring for a leadership role is more difficult because the skill set you require and the ownership required to guiding the organization is not something to be cavalier about. Hiring for a middle manager or a rank and file staffer is much different.
Owners, how many are there and what is their responsibility to the growth of the company? We can usually point to articles of incorporation and other filed documents to reinforce the division of responsibility, from active to passive status. Percentage ownership stake, for example. An organizational chart is an excellent visual to use as well to affirm hierarchy.
Course of action. What happens when a leader is sidelined temporarily (getting hit by that bus) or permanently incapable of performing their role. When a partner is departed, the company inherits their spouse or next of kin whether it’s wanted or not. That’s the legal system, not some made up scenario or old boogieman story to scare you.
Get it all in writing. Knowing what the results in advance of an unexpected power vacuum is beneficial to all involved, the owners, their significant others, the managers and the staff will sleep better at night knowing contingencies are in place. It is another layer of protection for the business. People do matter, despite a key purpose of a business is to generate profit. The bigger picture is the sustainability of the company for the long term. There’s a lot at stake, the customer relies on your team being available to troubleshoot an issue whether your business is a service or product-centric business it is about the experience as much it is about quality. The loss voluntarily or otherwise is no excuse to give your client beyond the initial shock of such a radical change.
If the above doesn’t encourage making a serious investment to shore up your business. If you have an agreement in place, reviewing is valuable. Over time, markets change, key personnel endure burn out or see the world differently than they did when the organization started. It could be a shift in culture as the organization grows in head count or geographically. There are a thousand different reasons why a leader chooses to vacate their responsibility. The majority of people who start a business do so because the desire to live a lifestyle of her choosing is a far greater motivator than clocking hours and banking a cozy, reliable paycheck. When lifestyle matters your arrangements with your business partners makes sense.
When the business suffers an unforeseen change, as the scenarios describe above, two things are certain, death and taxes. When a key person leaves by their choice or is no longer there, your lifestyle will change, maybe for a short period of time, it will be different. Suppose the following scenario, the business you’re in requires talented people with certain skill sets you don’t have, thus a leadership team is in place to help guide the organization on a path to brand ubiquity. When a key person is absent someone has to pick up the slack, it may not be you however; whoever fills that role now is taken away from their responsibilities. It is like a riptide, it looks innocuous until you get caught in the torrent of water, then it becomes serious. Potentially life or death for the organization.
Most leaders I engage with share their motivation for accepting the responsibility for leadership, it offers more latitude with lifestyle choices. When a leadership role is taken seriously, over time we gain the freedom to travel, earn courtside seats at a basketball game, take that surf safari to Latin America, see an award-winning stage play and so on. A key person absent creates upheaval and will most likely disrupt all the long days it took to earn the lifestyle you envisioned. If you’re still skeptical read case studies about businesses benefitting from a proper buy sell arrangement and talk with a business owner who elected to forego a properly designed safety net for comparison.
Think about what your business means to you, and why you choose to be in a position of leadership. When deconstructing your motivation for being a c-suite partner, it’s like choosing whether you drive with or without a seat belt. We all know there is potential for an accident. Buckling a seat belt is an automatic action. Making a similar choice for your operation is very much the same.
Originally published at clarastellabc.com.
