Tuesday, November 25, 2014

How to create a successful partnership

Beth and I are very fortunate in that we have a very successful partnership.  It is successful financially and personally.  Financial success is easy to measure: we are both making the amount of money we want/need.  Personal is a little trickier. I define personal success as a supportive and respectful relationship.  We help each other when things get tough and we celebrate the victories.  We don't criticize each other when we make mistakes, instead we help each other forgive ourselves.

Much of this is due to our approach to life being similar, but some of it is due to our structure and operating agreement.  We have seen several instances where business partnerships didn't work out and often it is because the work wasn't put in before the papers were signed.

Entrepreneurs tend to be go-getters and don't like to take the time to develop plans and paperwork.  Putting the time into making sure individuals are compatible is crucial to the success of the partnership.  It can be hard to get along when things are going well, especially for individuals who like to be in control.  It is nearly impossible when things are not going well.  This is when the operating agreement comes into play.  Partners need to think through how they will solve problems and disagreements before they start the business.  If they can't agree on how to do this before the business launches, they certainly won't be able to when they encounter difficulties.  Any every business will encounter difficulties.

We had a blog article in early 2013 which detailed what kind of questions should be asked and answered when creating an operating agreement.  If you are looking to start a business or you are in one and don't have an operating agreement, take a look and get started!


Tuesday, November 11, 2014

Another business fails due to poor planning

We lost another popular business in our area and I assume it is due to a lack of planning.  The business had a loyal following and ran smoothly so they decided to expand.  The original location of the expansion didn't work out, so they moved.  That location also had difficulties and the owners were unable to manage the increased staff and hours.  Service was poor at the new location and they quickly ran into cash flow issues.

As a result, the business had numerous dissatisfied customers and had to close.  The bad publicity will make it difficult for the owners to start up again even if they can get the working capital to do so on a smaller scale. This could have been avoided if the owners had taken the time to really research the location of their expanded business and determined if they had the time to manage both locations.  There are many entrepreneurs who think they can do it all and when forced to actually map out the amount of time each task takes and the amount of time they actually have available, realize that they must delegate.

The community is saddened by the loss of the business, the owners are in trouble financially and the employees are out of a job.  Planning is important!