Recently, I had an interaction with another business person that left me deflated. I felt deflated, because the other person was acting irrationally based on fear, rather than seeing the opportunity for what it was—mutually beneficial. We could have helped one another out in promoting our businesses. When I network it is to get to know someone so I can link them with others. As I build the relationship based on genuine interactions of getting to know them, the majority of the time I find us wanting to help and recommend each other’s services, because we value and can speak for the other’s services. When you have a working knowledge of gender and emotional intelligence you quickly realize it’s not the exchange of products or services that really matters; it’s the experience and connection that makes buying and selling memorable. This is more of an organic way of doing business, but I have found it to create sustainability, and long-term results.
A lot of times what we do not realize is that even in buying and selling, our emotions are often the deciding factor in whether the experience is a positive or negative one. So here’s the secret—always choose for your interactions to be about the other person, never about you. So in this example, while his behavior was not desirable, I let him close the door on the business relationship. It initially made me feel deflated, because there were great opportunities and possibilities, but I respected his decision. When you are able to label and identify your emotions as they are happening, instead of reacting based on emotions, you can choose logic and the best course of action.
Putting the concept, it’s never about you; it’s always about the other person benefits your business in three ways. It works in networking, with colleagues, and with customers. When you remember that it’s about the other person, and not you, then you can quickly wade through whom to pursue relationships with as you network. When you use this concept with co-workers and employees you keep the lines of communication open and honest. And, when you use this concept with customers, you create an environment where they feel good about themselves, and will want to return or recommend your product or service to others. In each of Dr. John Gray’s, Mars Venus books, the Mars Venus Coaching eWorkshops, and working with Mars Venus Coaches these principles are espoused. It is always about learning how to communicate with others in their language so they can hear and understand you. When you shut the door, you limit yourself on future opportunities. So remember when you are interacting with others, ask yourself how you can help them get what they need, not what’s in it for you. And, in doing so, people will seek out your business. And, when the other person is not of like mind, be genuine when you wish them well. You never know, they may come back!
Lyndsay Katauskas, MEd
Mars Venus Coaching
Corporate Media Relations
Posts Tagged ‘business owner’
In Business, It’s Never About You
Friday, May 25th, 2012How To Follow Your Passion When You’re Just Trying To Pay The Bills [BLOG]
Monday, February 6th, 2012
During tough economic times, many people think they need to sacrifice passion and focus solely on earning money. From a spiritual perspective, this is the exact opposite approach to generating real abundance. Yes, paying your bills takes practical action. But it also requires an internal belief system powered by inspiration and passion. Without an emphasis on passion, it’s likely that no matter how many actions you take, you’ll still wind up feeling stuck.
Neglecting passion blocks creative flow. When you’re passionate, you’re energized. Likewise, when you lack passion, your energy is low and unproductive. Energy is everything when it comes to earning. Quantum physics teaches us that our bodies are made up of subatomic particles that are energy. Your thoughts, attention, and focus affect your energy and therefore everything around you—including your bank account. So when you’re thinking only about the mundane to-do lists and practical action steps, you’re lowering your energy and in effect lowering your earning power.
Your life becomes what you think about most. When you focus on following your passion and letting inspiration flow, your energy is raised and your earning capacity is strong. But when you’re uninspired and bogged down by low-level thoughts, your attracting power is weakened.
Now that you have a better understanding of the earning value of passionate, positive energy, it’s time to take it more seriously. Read on for three simple, effective ways you can bring more passion into your life—even if you’re crazy-busy.
Who said your job had to be your only source of passion?
Our culture places such a huge emphasis on our careers, that we lose track of our passion projects. But who said your job had to be your only source of passion? A dear friend of mine is a powerful example of balancing passion and career. He works in corporate America, but moonlights as a guitar player. Though he spends his weekdays at a desk, he spends his weekends indulging his passion projects such as gigging with his band, writing, drawing, and learning about art. Though he dedicates a lot of his time to his career, there is no lack of passion in his life.
The passion of being of service
When we’re of service to the world, we feel inspired and passionate about the work that we do. Perhaps the work you’re doing is service-related—getting clear about the ways in which it serves the world may make you more passionate about it. If that’s not the case with your job, maybe you volunteer for a local charity once a month, or find a way to participate in your community, or promote bigger causes. Awaken a service mentality. When you serve the world, you serve your soul.
Shift your perception about the way you make money
If you’re hung up about the fact that your primary source of revenue doesn’t come from your true passion, shift your perspective. Be grateful for the work that you have and focus on the good stuff. Find even the smallest part of your work that ignites your passion. Maybe you love interacting with clients, or the neighborhood where you work. Maybe you’re learning something new by being on that job. Focus on what you do have and you’ll create more of what you want.
Take these action steps seriously. We all have work to do to support our economy, and if we’re void of passion we won’t have the energy and inspiration to serve. The more passion we ignite in our lives, the higher our earning capacity will be and the more we’ll impact financial growth in our country. When we all raise our thoughts we’ll raise our bank accounts—and greatly serve the world.
Gabrielle Bernstein |
Featured in the New York Times Sunday Styles section as “a new role model,” motivational speaker, life coach, and author Gabrielle Bernstein is making her mark. Expanding the lexicon for the next generation of spiritual seekers, Gabrielle is the #1 bestselling author of the book, Add More ~ing to Your Life, A hip Guide to Happiness. In September 2011 Gabrielle launched her second book, Spirit Junkie, A Radical Road to Self-Love and Miracles. In 2008 she launched her social networking site HerFuture.com for young women to find mentors.
Does Gender Bias Against Female Leaders Persist?
Friday, January 27th, 2012[Quantitative and qualitative data from a large-scale survey]
The present study of 60,470 women and men examined evaluations of participants’ current managers as well as their preferences for male and female managers, in general. A cross-sex bias emerged in the ratings of one’s current boss, where men judged their female bosses more favorably and women judged male bosses more favorably. The quality of relationships between subordinates and managers were the same for competent male and female managers. A small majority (54%) of participants claimed to have no preference for the gender of their boss, but the remaining participants reported preferring male over female bosses by more than a 2:1 ratio. Qualitative analysis of the participants’ justifications for this preference are presented, and results are discussed within the framework of role congruity theory.
To read the survey in its entirety: http://m.hum.sagepub.com/content/64/12/1555.abstract?sid=ab886a07-1048-41d5-a51f-4564a3a0db0b
Then click PDF (2nd button in upper left corner).
Article Notes
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Kim M Elsesser is a research scholar at the Center for the Study of Women at the University of California, Los Angeles. In addition to her PhD in Psychology from UCLA, Elsesser holds graduate degrees in management and operations research from MIT. In her business career, she was a principal at Morgan Stanley where she co-managed a quantitative hedge fund. More recently she has consulted on large-scale national studies relating to gender and work, and her research interests include gender and leadership, gender discrimination, sexual harassment, cross-sex friendships and social support in the workplace. Her most recent work appears in Human Relations.
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Janet Lever is Professor of Sociology at California State University, Los Angeles. For the past 40 years her research has focused on wide-ranging issues related to gender studies and human sexuality. Since the early 1980s Lever has collaborated with mass media both to popularize academic scholarship and to harness its power to create data for later scientific analysis. After leading teams of researchers that designed the three largest magazine sex surveys ever tabulated, she came to ELLE to lead a series of surveys hosted on both the health and the business sections of msnbc.com. Her Office Sex and Romance Survey (2002) and the Work and Power Survey reported on here are among the largest surveys on these workplace topics. As with the magazine surveys, each of these internet surveys has been reanalyzed for social science, management, health, and medical audiences.
Vision, Strategy, and Tactics
Wednesday, January 25th, 2012- Vision: What you want the organization to be; your dream.
- Strategy: What you are going to do to achieve your vision.
- Tactics: How you will achieve your strategy and when.
Your vision is your dream of what you want the organization to be. Your strategy is the large-scale plan you will follow to make the dream happen. Your tactics are the specific actions you will take to follow the plan. Start with the vision and work down to the tactics as you plan for your organization https://ed-oesterreichische.at/.
Concepts Are The Same
Whether you are planning for the entire company or just for your department the concepts are the same. Only the scale is different. You start with the vision statement (sometimes called a mission statement). When you know what the vision is you can develop a strategy to get you to the vision. When you have decided on a strategy, you can develop tactics to meet the strategy.
Vision
A vision is an over-riding idea of what the organization should be. Often it reflects the dream of the founder or leader. Your company’s vision could be, for example, to be “the largest retailer of automobiles in the US”, “the maker of the finest chocolate candies in London”, or “the management consultant of choice for non-profit organizations in the Southwest.” A vision must be sufficiently clear and concise that everyone in the organization understands it and can buy into it with passion.
Strategy
Your strategy is one or more plans that you will use to achieve your vision. To be “the largest retailer of automobiles in the US” you might have to decide whether it is better strategy for you to buy other retailers, try to grow a single retailer, or a combination of both. A strategy looks inward at the organization, but it also looks outward at the competition and at the environment and business climate.
To be “the management consultant of choice for non-profit organizations in the Southwest” your strategy would need to evaluate what other companies offer management consulting services in the Southwest, which of those target non-profits, and which companies could in the future begin to offer competing services. Your strategy also must determine how you will become “the consultant of choice”. What will you do so that your targeted customers choose you over everyone else? Are you going to offer the lowest fees? Will you offer a guarantee? Will you hire the very best people and build a reputation for delivering the most innovative solutions?
If you decide to compete on lowest billing rates, what will you do if a competing consulting firm drops their rates below yours? If you decide to hire the best people, how will you attract them? Will you pay the highest salaries in a four-state area, give each employee an ownership position in the company, or pay annual retention bonuses? Your strategy must consider all these issues and find a solution that works AND that is true to your vision.
Tactics
Your tactics are the specific actions, sequences of actions, and schedules you will use to fulfill your strategy. If you have more than one strategy you will have different tactics for each. A strategy to be the most well-known management consultant, as part of your vision to be “the management consultant of choice for non-profit organizations in the Southwest” might involve tactics like advertising in the Southwest Non-Profits Quarterly Newsletter for three successive issues, advertising in the three largest-circulation newspapers in the Southwest for the next six months, and buying TV time monthly on every major-market TV station in the southwest to promote your services. Or it might involve sending a letter of introduction and a brochure to the Executive Director of every non-profit organization in the Southwest with an annual budget of over $500,000.
Firm or Flexible?
Things change. You need to change with them, or ahead of them. However, with respect to vision, strategy and tactics, you need some flexibility and some firmness. Hold to your dream, your vision. Don’t let that be buffeted by the winds of change. Your vision should be the anchor that holds all the rest together. Strategy is a long-term plan, so it may need to change in response to internal or external changes, but strategy changes should only happen with considerable thought. Changes to strategy also should not happen until you have a new one to replace the old one. Tactics are the most flexible. If some tactic isn’t working, adjust it and try again.
Manage This Issue
Whether for one department or the entire company, for a multi-national corporation or a one-person company, vision, strategy, and tactics are essential. Develop the vision first and hold to it. Develop a strategy to achieve your vision and change it as you have to to meet internal or external changes. Develop flexible tactics that can move you toward fulfilling your strategy.
By F. John Reh, About.com Guide
To Launch Your Business, Embrace Risk-Taking
Friday, January 13th, 2012By learning what makes veteran entrepreneurs adept risk-takers, aspiring starters-up can get closer to taking the leap
By Monica Mehta
To evaluate the merits of their startup dream and strategize about its future, aspiring entrepreneurs can sweat out business plans and huddle with experts. To prepare for the emotional roller coaster of venturing out on their own, though, there’s little to do in advance. They must launch and learn on the fly. For those struggling to decide when to launch, insight from seasoned risk-takers and researchers who study them could speed the decision-making process.
For Andrew Ullman and Hayward Majors, co-founders of New York’s CollegeSolved.com, an online expert network for college admissions, taking the leap did not come easily. After hatching their idea in 2008, they kept their day jobs in corporate law and finance, conducting research and seeking industry input in their spare time. By February 2009, they had a well-researched business plan but lacked the confidence to pursue the venture full-time. “Despite having an opportunity in hand and some financial stability, it took the validation of creating a beta version of the website and raising capital from outsiders to get us comfortable with the [lifestyle] change,” says Ullman.
Like countless others before them, Ullman and Majors were adept at identifying risks but hadn’t learned to take them. “When it comes to taking risks, knowledge is a highly overrated motivator. Otherwise, we’d all buy low and sell high, and our kids would eat their vegetables,” says Dr. Frank Murtha, a behavioral psychologist in New York City who works with traders and specializes in financial risk-taking. He suggests that seizing opportunities when they arise and rolling with the punches requires a skill set few have mastered.
Chemicals in the Brain
In 2008 researchers at the University of Cambridge studied the risky decision-making abilities of entrepreneurs and corporate managers with similar IQs and experience levels using a battery of neurocognitive tests. They found (paywall alert) that the entrepreneurs consistently took riskier bets. The results show that risk-taking is both behavioral and physiological. The entrepreneurs not only scored higher on personality tests that measure impulsivity and flexibility; they also experienced a chemical response in the reward center of the brain that the managers did not.
While we have little control over our natural programming, it is possible to change behavior over time, as most therapists advocate. To offer aspiring entrepreneurs steps to take immediately, I compiled these tips:
Socialize with other entrepreneurs. Entrepreneurship rubs off. A study from Babson suggests that children of entrepreneurs are more likely to start businesses, as are those who know other small business owners. The inverse also holds. Risk aversion can be contagious, as Ullman and Majors experienced. “We always wanted to be entrepreneurs, but we were locked into lucrative jobs that were deemed acceptable by family and friends,” says Majors. Most large cities offer business meet-ups and other networking events where like minds gather.
Set yourself up for small successes. “Our brains are motivated by success to greater success,” says Dr. Richard Peterson, a psychiatrist and PhD of neuroeconomics who has written two books on financial risk-taking. Immediately after experiencing a victory, our neurons process information more effectively, we become sharper and learn faster. Set small goals, no more than three months in length. Even incorporating a hobby that sets you up for small successes can make a difference in your professional life. A personal aside: I’ve just given hubby the license to play World of Warcraft to sharpen his risk-taking prowess.
Have a whiskey sour. Who hasn’t attended a cocktail hour feeling intimidated by a room of unfamiliar faces? A drink can stimulate the impulsive side of your brain’s reward center and give you the courage to strike up a conversation. More isn’t always better when it comes to playing with brain chemistry, of course. For purposes of productive impulsivity, stick to just one.
Or skip the drink and try channeling your inner Richard Branson on your own. We are groomed to seek information when making decisions. Break the habit by practicing by yourself in an environment where your decisions will have few meaningful consequences. Order what instantly comes to mind in a restaurant, for example, then graduate to other arenas.
Have faith. “As much as knowledge is overrated, religion is underrated,” says Murtha. Taking a leap of faith is something every entrepreneur must do at some point or another. Having faith that everything will be O.K., whether it is derived from a spiritual belief or elsewhere, contributes to the willingness to be adaptable.
Choose a partner who possesses skills you don’t. If impulsivity and adaptability aren’t your strong suits, find a partner who already has what you don’t. Of course, don’t bring on a partner unless he or she adds value to the project beyond being able to roll with the punches.
Ullman and Majors quit their day jobs in September 2010 when it became clear investors were willing to commit. They closed the round in December, raising enough from friends and family to sustain the business for about two years, and finally launched CollegeSolved.com in early April. “After more than two years of planning, we thought we’d experience a huge relief post-launch,” says Majors. “But the party is only getting started.”
[Monica Mehta is managing principal of investment firm Seventh Capital in New York City. She has advised hundreds of small businesses over the past 15 years. .]
The Entrepreneurship Gender Gap Isn’t Shrinking
Thursday, January 12th, 2012Women still start fewer businesses than men and are less likely to achieve business success, according to a comprehensive new international survey
Drawing on interviews with more than 175,000 adults and multiple sources of data, the Global Entrepreneurship Monitor 2010 Women’s Report, released earlier this week, is the most comprehensive study to date of women’s business activity, says Donna J. Kelley, associate professor of entrepreneurship at Babson College and lead author of the report. Evaluating 59 economies, it found that more than 104 million women ages 18 to 64 were actively engaged in starting and running new business ventures, and 83 million women were running businesses that were more than three years old.
Despite the impressive numbers, the report reveals a persistent gender gap. Kelley spoke this week to Smart Answers columnist Karen E. Klein about the findings and the policy implications of the report. Edited excerpts of their conversation follow.
Karen E. Klein: This GEM survey is the first to look specifically at women entrepreneurs since 2002. What’s changed?
Donna J. Kelley: We continue to see consistently that fewer women become entrepreneurs than men. In some economies you have ups and downs in entrepreneurship and women follow those trends. But in general, fewer women participate in most of the world’s economies.
In our 2010 data, only one country had more women than men involved in entrepreneurship and that was Ghana. What we see there and in many developing countries is that women participate out of necessity because they need to create income for their families and they have few other job possibilities.
Which countries had the highest participation rates for women entrepreneurs?
The Latin American economies and the sub-Saharan African region had more relative participation from women compared to men and there are higher entrepreneurship rates overall in those countries as well. In the Middle East, Eastern Europe, and Northern Africa, we see both lower entrepreneurship rates overall and less participation by women.
What about Asia?
That’s interesting. Korea has the lowest participation rate for women relative to men even though the country as a whole has pretty good entrepreneurship rates. Japan also has low participation rates for women, and low entrepreneurship rates overall. China has both high rates of entrepreneurship overall and pretty good participation rates for women, with 16 percent of the male population engaged in entrepreneurship and 12 percent of women.
What kinds of factors determine how many women participate in business ownership?
There are a lot of factors, including the availability of employment options for women and the availability of child care. It’s hard to identify specific reasons in specific countries, but culture is really important. Talking with some of my Korean colleagues, they say there are definite role expectations for women and fewer day-care options. In China, women typically have their parents take care of the children so they are empowered to go out and work.
Which countries had the greatest level of equality between men and women?
Australia has equal numbers of women and men participating in entrepreneurship, but more than twice as many men running established businesses as women. In the U.S., 8 percent of the male population and 7 percent of the female population is engaged in entrepreneurship. But again, there are more male established business owners than female business owners.
Interestingly, in Norway we saw a reverse trend. There are three times as many males as female entrepreneurs, but only 1.5 times as many males as female established business owners.
What attitudes hold women back from starting businesses?
For one, we found that women are just as likely as men to see entrepreneurship as attractive, but they are less likely to see opportunities for starting businesses. In fact, since 2002, the perceptions about entrepreneurial opportunities declined among women in developed economies.
One thing that is critical is women’s belief in their own capabilities is far lower than men’s. Less than half–47.7 percent–of women believe they are capable of starting a business, while well over half–62.1 percent–of men believe they are capable. That lack of confidence persists through all economies and cultures we studied.
Fear of failure is another stumbling block that’s more common among women than men.
Yes. Women are more likely dissuaded from entrepreneurship due to fear of failure and they tend to have smaller and less diverse support networks. They are more likely to rely on family members for support and they are less likely to know an entrepreneur. Men have larger business networks, know more entrepreneurs, and they are more likely to rely on business colleagues for help and support than on family members.
What conclusions do those results lead you to?
We think that mentoring and entrepreneurial role models can boost women’s confidence. Also, women are just as well-educated and as likely to create innovative products as men, but they have half the growth expectations for their businesses as men. So, for those female-owned businesses that do have high-growth potential, we need to get them the resources, support, training, and mentoring they need to move to that next level.
Your report reviews some government, nonprofit, and private-sector programs aimed at trying to enhance women’s entrepreneurship. What did you find?
In Ireland, we covered one initiative that is focused on growth entrepreneurs. They get a female mentor to run roundtable forums focusing on growth, where women business owners can share what they’ve learned and do group problem solving. The lead entrepreneur acts as a role model and a mentor, and it has been really successful at helping women with limited resources tap into their own creativity. More than 150 women entrepreneurs have benefited.
[Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.]
Provide constant celebrations of your client’s successes
Wednesday, January 4th, 2012| Stan Mann, Success Coach stan@stanmann.com |
Welcome to secret number 5! You have learned how to be in the right frame of mind to create a 7 figure business and a free life filled with bliss; how to have prospects compelled to call you and meet you; how to easily without selling share your unique service offering; how to WOW your customers and now you are ready to provide constant celebrations of your customers success.
Many people wonder what I mean by a customer’s success. Let me address this right away. When a customer hires your company or buys your products or services that in itself is cause for a celebration of them making a great decision. I instantly celebrate their success with a letter, note, brownies and other items. I write personal note cards as well.
When else could a customer have success? Here are some examples in my own personal life of my success as a customer of other people where I wasn’t acknowledged and could have been. I had an expert re-do my social media look. When this was done a celebration was in order. I had my attorney file my papers for my foundation and no celebration occurred. And I reached a major medical change for the better and my doctor missed the celebration opportunity.
How many of these opportunities do you miss? Each time you miss one you show the customer they aren’t really special, you don’t really care deeply about them and you certainly aren’t exceeding their expectations.
Today I want you to think about all the celebration’s you could be having. Create a big list. Include holidays, birthdays, purchases, milestones and anything else you can think of. Be a bit wild and crazy and include as much as you can.
Then pick at least one item and implement that with every customer. In a week or so create a list of 12-24 ways you will celebrate each of your customers regularly. The sky is the limit so have great fun coming up with these items. When you see how much your customer’s appreciate you caring about them and again wowing them, you will be excited to do more and more celebrating.
I celebrate all my customer’s because they are my customers. They are my extended family and I acknowledge and honor and celebrate them regularly.
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Effective Planning Is About What to Leave Out
Monday, January 2nd, 2012posted by: John Jantsch
Mon Dec 19, 2011
Today my staff and I are taking the entire day to create a strategic plan for the coming year. The process, and its ongoing nature, is something I call Commitment Planning. This is a practice that I highly recommend, but perhaps not for the reason you may assume.
But first, the rules
- No one has a specific role today
- Let brainstorming be brainstorming – possibilities and ideas
- Be present
- Be judgmental tomorrow
- Remember, you are planning for the entire year
And, then my requirements
- Food and drink should be awesome
- Leave lots of time and space for physical movement
- Make it easy to capture everything
Lots of companies completely neglect the need for planning and some that do it consistently view it as a way to determine new things they want to address in the year ahead.
To me, the greatest benefit of any planning session is to decide what not to do.
There’s always more to do than you can possibly get done and what happens all too often is that we give a little attention to a lot of things and effectively water down what should be our priorities.
When we plan the right way, we look long and hard at what makes us money and (hopefully) find ways to focus on doing more of that better, rather than thinking up more of something to divert our attention.
I recently hired my own business coach and one of the first things we’re focused on is getting me to stop doing things that don’t make sense and start spending more concentrated time on my highest payoff activities.
This idea holds true for entire organizations as well and one of the best ways to get to the heart of what’s holding you back is planning.
The first planning principle you must embrace however, is that the goal of the process is to help you limit what you are going to do and do well. Instead of creating a laundry list of wants and dreams, your charge in the planning process is to create a very small list of objectives and goals grounded in the overriding purpose of the business. Everyone in the organization then must commit to this list. From your small list you can carve out a requisite number of strategies and tactics that support these business objectives.
In fact, your aim is to create a total plan outline that fills no more than one sheet of paper. (No 6pt type allowed.)
Note also that we’re not spending the day to make a business plan or create a marketing plan – plans aren’t the secret, planning is. It’s the continuous process of planning, acting, measuring and planning that moves the organization in the direction of its goals.
Using and teaching a continuous planning process like this is one of the ways you empower your staff to know they are taking right action on the most important things at all times and knowing this brings a confidence that in itself is a commitment generator.
Commitment planning is a management style that frees your people to be creative instead of forcing them to be bound by a process only system driven activity.
Planning is not a one-day event or even year-end activity. Sure, there may be certain time bound planning periods that occur naturally, say at the end of a quarter, but the real way to keep commitment alive is to live it through a creative process that allows everyone to focus on the things that matter most.
Ben McConnell, coauthor of the Church of the Customer Blog and principal of management consulting firm Ant’s Eye View, has written about a planning process he calls OGST (Objectives, Goals, Strategies and Tactics.)
What I love about McConnell’s framework is that he uses each of these planning words in ways so simple as to actually create a useful set of definitions for these ridiculously misused terms.
Go get this visual representation of OGST and I think you’ll see what I mean.
As you can see, a planning process like this can help the kind of simple clarity that is so often missing in the “what should we do next” business management style. We borrow heavily from McConnell’s framework add some of our own magic to help put the focus on results and bust through constraints.
No matter what exact process you use for planning, with a one page plan full of your committed priorities in hand you can analyze any idea in about two seconds and determine if you should pursue it or dismiss it. Focusing on your strengths and finding ways to turn them into even greater assets is how individuals and organizations realize their potential.
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What if your business partner wants to break up?
Friday, December 16th, 2011By Jeff Haden
Setting up a business partnership is a little like starting a romantic relationship, although admittedly the benefits package and perks are a lot different.
In the beginning stages it’s easy to only focus on the positives, but a solid partnership agreement also takes into account a number of scenarios, especially the potential for negative outcomes. If the worst does happen, your partnership agreement should protect both you and your partner.
Make sure your partnership agreement covers what will happen if:
One of you wants out. Exit clauses are standard in partnership agreements. For example, if you want out, your partner may be obligated to purchase your ownership share.
That’s the easy part. The tricky part is determining the value of the business when that happens. Business valuation is part science, part art, and different approaches often result in very different results. Whether you agree to use liquidation value, book value, or the income, asset, or market approaches, stipulate in your partnership agreement how the business will be valued and whether a third party will conduct the valuation. Then the breakup will be a lot cleaner and less emotional.
One of you passes away. Say your partner dies. Typically his or her ownership stake passes to the spouse or children. You automatically get new partners — new partners you may not want. A buy-sell agreement can allow you to purchase your deceased partner’s share, but what if you don’t have the money or can’t get financing?
There’s an easy solution: Stipulate that each partner will carry life insurance sufficient to cover the purchase of the other partner’s share. Each partner designates the other partner as beneficiary. Then, if your partner passes away, you always have the funds to complete the buy-sell agreement. Just make sure you add additional coverage as the value of your business grows.
One of you wants to change the agreement. Paul Allen claimed Bill Gates asked him to change their ownership split of Microsoft several times. Perspectives change as a business evolves, and partnership agreements can be amended as often as you like — as long as all partners agree.
Sometimes one of you might not agree to proposed changes, so stipulate how fundamental disagreements will be resolved: Mediation, arbitration, triggering a buy-sell clause, etc. Knowing how a problem will eventually be resolved if you aren’t able to agree often makes it easier to work through differences.
You can no longer get along. No matter how well you work together now, misunderstandings, hurt feelings, and changing priorities can damage the best relationships. When that happens, falling back on the terms of your partnership agreement can help both of you stay objective.
For example, your partnership agreement may stipulate you are responsible for 60% of the work since your partner provided a greater share of initial capital. If he feels you aren’t doing your share, the more clearly you defined what “the work” means in your agreement, the easier it is to determine whether you are in fact pulling your weight. Whenever possible, use hours, numbers, dollars — quantifiable measurements.
Your business is already established. If the agreement you have is insufficient — or if you don’t have a written agreement — it’s not too late.
Take a step back and create a comprehensive partnership agreement. If your partner hesitates, explain you aren’t trying to change your current working conditions. All you’re trying to do is eliminate as many ways you might disagree in the future as possible.
Fortunately, talking about potential negatives with a potential business partner is a lot easier than having a similar discussion with a romantic partner. Setting up a prenuptial agreement may not be the greatest way to start a relationship, but setting up a comprehensive written partnership agreement is the perfect way to start a business partnership.
April/May Applause to Our Mars Venus Coaches
Wednesday, June 2nd, 2010
