Pick a Fight, It’s Good for Business: What the On-Line Document Preparers Don't Prepare you or your Business For
By, Leigh Ann Roberts
I've always been suspicious of those couples- you know the ones I am talking about. When asked about their recent engagement or nuptials, they exclaim proudly " ...And we've never had a fight!" My response has always been, "Well, honey, you better pick one- fast!"
Such is human nature, right? New relationships and ventures are exciting and during those times, we tend to focus much more on the horizon and on big dreams of success and golden geese rather than the less sexy, a tad boring even, day to day details and minutia upon which businesses and organizations are inevitably built. Yes, in new partnerships, whether in love or even in business, many times we just skip the difficult conversations. That's right; we just skip it and go straight to the "fun stuff." Who wants to rain on any parades with talk of money, debt, times of conflict and failure? It has been my experience after years of mediating what I call "business divorces", that these difficult topics are the conversations that can literally make or break a partnership, a family, a business or a nonprofit organization. My advice to people going into business together or merging ventures/organizations- be very intentional about having these important, initial conversations about these difficult topics and, if you have to, pick a fight! You want to see what happens to your new partner or partners when the rubber meets the road.
In my role as an attorney and a mediator, individuals and organizations typically come to me when the wheels are starting to (or have completely) come off the cart, so to speak. The shine of the new joint venture has worn off, personalities and conflict styles have emerged and these same people who were once so intoxicated with the strengths of their new partner seem to be focused, unwaveringly on only the warts and the challenges coming from the other side of the table. In a business divorce, more affectionately known in my business as a business or partnership dissolution, I often mediate the difficult conversations of who gets what and what happens next: who gets the business name and brand; who takes the assets such as furniture, equipment and other property; who gets the customer/client list; and, to what extent will the now former business partners compete in the marketplace. Believe me; if you have the choice, you want to have these conversations at the time of the wedding versus at the time of the divorce. At the beginning of the relationship, people tend to be more trusting, amicable, even more reasonable in some cases, versus at the end of the relationship where trust and communication are likely waning and there is a general reduction of overall positivity about the process. Individuals starting a business and larger organizations preparing to merge with another organization, must be very intentional at the beginning stages of any entity formation or merger process, whether a for profit or not for profit organization. Each individual and organization has a "culture" so to speak and it is the mindful blending of these "cultures", the standards, the norms, that make a successful organization.
The trusted advisors, leaders, attorneys and financial advisors and professionals of these individuals and organizations can add a great deal of value by guiding their clients through these opening, difficult conversations. As an attorney, I provide entity formation services for business and nonprofits. Simply put, when individuals want to form a limited liability company, an S-Corporation or even form a 501(c)3, (c)6 or other not for profit organization, I prepare the necessary paperwork to help that organization meet state and federal requirements. I am not, however, just preparing paperwork for my clients. To do so would deny clients of advice, feedback and guidance that many small businesses and new organizations need. In my practice, I spend a great deal of time talking with the individuals that will make up the leadership of the proposed organization and business to help them uncover and discuss the "culture" of their organization and what expectations individuals have going into the new venture. Like a reporter, I "Who, What, Where, When, Why, How" the players and, as they answer my questions, many of their proposed business partners are hearing these responses for the first time. For example- what are your work styles and conflict styles? Believe me, it is really good information to know that your business partner expects that everyone will work from 8:00 a.m. to 7:00 p.m., and on Saturdays, especially if you are more of a 10:00 to 2:00 type. Also, if you need time to "marinate" on points of conflict before jumping into a debate with a more aggressive personality type, you will certainly want to get a commitment from your new business partner that he or she will grant you that request.
As to the "What and Where" of my query, I strongly recommend that new business partners or organization leaders work through a business plan together. Many questions are raised during a strategic business plan discussion, questions like: what are our goals; what does success look like to me; and what steps do we envision in accomplishing these goals. If it is starting to sound like my general query slows the formation process down a bit, it is because it does. Advisors should create a certain amount of deliberation and intentionality to the entity formation process. In my experience, this is time very well spent and can save individuals and organizations a lot of headache and expense down the road.
In recent months, I have seen as trend that further exacerbates the unfamiliarity of individuals with their proposed business or organization partners. This is the trend of small business owners and organization leaders skimping on obtaining good, quality legal and professional advice in the entity formation process. Long before the economy took a turn, small businesses owners began turning to office supply stores and the Internet for one-size-fits-all legal documents, everything from corporate documents, contracts, policy & procedures, and partnership operating agreements, or even worse, starting organizations with no substantive documents at all. Well, as my grandmother's grandmother used to say, you get what you pay for. I can't emphasize enough the short-sightedness of that sort of approach. Apart from the fact that many of these decisions will have legal and tax ramifications for years to come, there are simply too many other questions that never get asked when simply filling in blanks on a form. Questions about how do you approach repayment of debts, how do you manage conflict, what does success look like to you and how do you manage failure, simply aren't included in any service at documentzoom.com. And it is not a matter of IF you and your organization are going to navigate tough conversations about debt, money, conflict, strategy and failure; it is only a matter of WHEN. Smart business and organization leaders understand that having those conversations early is wise and pragmatic. Having those conversations "on the fly" produces results that are reactive and often less reasoned.
Many moons ago when my husband and were planning on getting married, we discovered that our minister had a requirement that we attend pre-marital counseling prior to our actual wedding. At the time, I did not see the wisdom of this practice. His advice was simple- "Establish rules of fighting fair." I thought this was odd coming from a minister but now it makes a lot of sense to me. The next time you hear of someone talking about starting a business together or merging existing organizations, I hope you will ask them if they know each other's conflict styles. If they don't have an answer, tell them to pick a fight and figure it out- it's just really good information.
Leigh Ann Roberts is an attorney, mediator and founding member of the Brentwood law firm of Papa & Roberts PLLC. Attorney Roberts is a frequent lecturer and speaker on topics related to business law, nonprofit governance and conflict management in general. For more information about Attorney Roberts' services for small business, nonprofits, families, or individuals, go to www.PapaRoberts.com.
Revise with State of Grace Materials also-
Five Essential Issues to Consider Prior to Entering a Business Partnership
The benefits of a good business partnership are enormous: camaraderie, synergy, better decision making, ability to pursue larger opportunities, relief from those jobs that do not align with your strengths or interests. But the costs of a bad partnership can be devastating; it can tear friendships, families and businesses apart. The emotional toll impacts not just the partners themselves, but their spouses, employees and anyone who is close to them. Financial costs accrue from a partner's underperformance, time lost focusing on issues that do not generate revenue, lost productivity among employees, not to mention the possibility of litigation or other legal costs.
The best way to maximize the chances of having a positive partnership experience is to carefully talk through all relevant issues prior to entering the partnership. Very few people have partnership agreements that are sufficiently clear and comprehensive. Even those who have legal contracts in place often neglect to address some basic issues that could lead to bad blood down the line.
- Are your business priorities in alignment? Profitability, customer service, innovation, etc. are all important. When push comes to shove, do you agree on which will take precedence?
- Do you have the same long-term vision? How many employees do you want? How many locations do you want? As the company grows, how will your respective roles change?
- What is your motivation for going into partnership? Companionship? Accountability? The other person has skills or expertise you don't have?
- What are other ways you could get what you are looking for out of the partnership? Could you hire someone to fulfill those roles? Could you hire a coach for accountability? How else might you get the companionship you desire?
- What happens if one of you is incapacitated for a period of time? Emergencies happen. How will you respond if your partner has a serious medical or family problem that interferes with her ability to perform the work? Do you have a plan in place for such an eventuality? Insurance? Have you decided how this would impact your respective ownership shares and/or income?
- How will you make business decisions? Will you make all decisions by consensus? Do you plan to divide responsibilities by area of expertise? How will you resolve major disagreements?
- What is your plan for making changes to the partnership? Nothing remains the same forever. What if one person wants to leave? What are your methods for valuing the company and arranging a buyout? Under what circumstances might you add an additional partner?
- What if one person wants to dissolve the partnership and the other does not? Do you have a structure in place to resolve disputes? Do you have a plan in place for dissolving the partnership?
- Do you agree on what constitutes a good working environment? Is efficiency most important? Colleagues taking the time to get to know each other? High quality support staff? Attractive décor? Using the most cutting edge technology?
- By what method (and how frequently) do you anticipate communicating? Do you prefer email? Face-to-face meetings? Phone conversations? Text messages? How late at night (or early in the morning) is an acceptable time to call you on the phone?
It has become clear to me that there is a huge need for coaching in the realm of business partnerships, so I am now offering two partnership-related coaching services. I assist partners or prospective partners to explore systematically and define their expectations of one another and create contingency plans to address potential future issues. Second, I help partners whose relationships have already deteriorated to communicate more clearly, determine if the situation is salvageable, and design a plan for moving forward.Contact us for more information.
