Setting up a business in partnership?  Before you carried away with the euphoria and excitement, there are some things you need to consider.  Many partnerships start wonderfully and later turn sour due to misunderstandings, differing expectations or change of personal circumstances.  Dealing with these possibilities up front will save you a lot of potential grief.

“Many hands make light work” ~ John Heywood

You have probably thought about the benefits of going into partnership – your partner may have complementary skills or be sharing the cost of setting up the business, or quite simply that it will be easier if another person shares the load with you.  All valid reasons for a partnership, but here are some other considerations:

#1 – Choose the right Business Structure

Most people use the term “partnership” loosely when it comes to business but understanding the actual structure of your business is important.  Will you set your business up as a company or as a partnership?  In a partnership, each partner is “jointly and severally” liable for any debts incurred by the partnership which means you are liable not just for your share, but all the business debts.  Using a company structure instead would limit your liability but the trade off is that companies are more expensive to set up and more onerous to maintain administratively.  Make sure you understand the pros and cons of each structure to determine which suits you best.  Seek professional advice if necessary.

Shaking hands

Image credit: acerin via stock.xchng

#2 – Consider the value of your respective contribution

A partnership is often formed because partners bring different skills into a business.  How these skills are valued can be tricky but should be considered.  Resentments can arise later when one party feels the other isn’t pulling his or her weight.  From a practical point of view, the nature of certain skills may mean that one person contributes more physical hours to a business.  Is this reasonable?  Is this understood by and acceptable to all parties?  How will any imbalance be dealt with?  Discuss what each partner’s expectations of the other are.  

#3 – Have guidelines for management disagreements

Everything may work smoothly at the beginning.  There is agreement, values and visions that align, but it would be prudent to assume that this will not last indefinitely.  Eventually something will crop up.  This could be anything from day to day issues to the future direction of the business.  Consider these possibilities at the start.  It’s a lot easier to manage disagreements if you have some guidelines in place.  How often will you discuss strategic issues?  How should difficult issues be raised?  What happens when you disagree?

This is a classic “too hard basket” item that gets swept under the carpet, but it is also one that has potential to derail everything so ignore at your own risk.

#4 – Clarify your exit strategy

What happens if one partner wants to leave or retire?  Set out terms that govern this scenario and look at it from both sides i.e. assuming you are the one that wants to leave, or you are the one that is staying.  Would you be comfortable with the terms in either scenario?

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Part of your business planning process should include dealing with the issues raised here as well as considering others that may be unique to your partnership.  If for example, your partner is also your spouse, or a family member, there may be even more to discuss and consider.  Ensure everything is documented.  There is nothing worse than fuzzy memory when something goes wrong.

If you have been in a business partnership and have encountered issues not covered in this post, please do share them in the comments!

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The choice of an appropriate business name is one of most important decisions a new business owner will have to make.  Choosing what we think is the perfect name only to find out that someone got there first can be heartbreaking.  I know, having been through this process with a number of clients.  Then the iterations happen.  How can we get around it?  Can we have a variant?  Can we use different words that mean the same thing?  All valid strategies, but always ending up, feeling like a compromise.  Sometimes, it is better to just start again from scratch.

Issues with similar business names

If your preferred name has been taken by a competitor, choosing an alternative that is similar is fraught with dangers.  Using an extreme analogy, it would be like setting up a fast food chain and calling your business “McDermotts”.  Some might favour this as a strategy to “piggyback” the goodwill already generated by the competition.  I think it is a poor excuse for lack of creativity, not to mention a possible infringement of trademarks.

Then, there is brand confusion.  A web designer I once knew made this compromise, choosing a name so similar to a competitor, with only one letter separating their business names.  When I looked for her business on the web, I found her competition instead.  Whilst there are ways and means to overcome this issue, it is an unnecessary risk.  Surely there is an equally good name to be found?

Business_name

Be unique and memorable

While SEO is important, do not let that be the sole determining factor in your choice of business name.  Competitive keywords are difficult to rank for and business names that are based on keywords are generally bland and uninteresting.  Using content to rank for SEO is better strategy than compromising on a business name for the sake of SEO.

Be unique.  Use taglines that help people remember and recognise you.  Good business names last the distance.  Choose one that is meaningful and memorable.

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Yes, I am deliberately being provocative, but it is true, ineffective meetings destroy the true value of collaboration.

Ever heard of the phrase death by committee?  It’s a long-standing joke that committees can’t get anything done.  If you’ve ever been involved in a community based committee, you probably get it.  If not, think about all the meetings that you’ve attended where there is a lot of talk but nothing gets done.

The aim of collaboration is to generate better ideas and results than one individual could on his or her own.  Collaboration is not an opportunity to pander to egos and to provide everyone equal say and equal input.

Being “inclusive” is theoretically a good idea until it turns into a “right” to have your two cents worth.  I see this in larger organisations who have “collaboration” as one of their organisational aims, which sometimes goes awry on implementation as meeting after meeting is scheduled.  Projects becomes sluggish and instead of sparks of brilliance, the safe and known path is usually the result.

Collaboration_tweet

 

Just to be controversial, I am tempted to say – don’t have meetings.  It would be trailblazing but probably not realistic.  So the next best thing would be some tips on how to have more effective meetings.

Top 3 tips on how to have better meetings

  1. Reduce the number of meetings and shorten them
    Don’t have a meeting for the sake of having a meeting.  Consider whether a meeting is actually required before setting one up.  If the purpose is to update, this can be easily done via electronic means.  Make meetings about action, not updates.  Shorten meetings, or at least make it length appropriate.  The more unnecessary time you allow for a meeting, the likelihood of distraction is higher.  Shorter meetings create urgency and improves focus.
  2. Reduce the number of attendees
    You don’t need everyone at the meeting.  Choose your attendees carefully, and everyone else can be on the cc: list when an update is issued.  Input can be sought via email prior to the meeting.
  3. Communicate purpose of meeting
    Get everyone clear on the purpose and outcome that is required of a meeting.  Communicate this clearly prior and at commencement of the meeting.  Note that this is not the same as having an agenda.  An agenda a piece of paper that does not substitute for communication!

I would be keen to hear your feedback.  Love or hate meetings?  Do you think they help or hinder collaboration?

 

www.coachmi.com.au

Coach Mi @ FB

I’m confused.  What’s the difference between a blog and my newsletter?

Blog or newsletterThis question comes up time and time again with business owners who are just starting out with their online presence.  Already stretched for time, producing content for a blog seems like a big task.

Newsletters are easier to understand.  They are digital versions of paper newsletters that we have all received at one time or another.  Although blogs have been around for some time, many business owners still have trouble getting their heads around how and why.  This post is about “why”.

3 reasons why you should blog

#1 – Search Engines

Search engines like blogs because they like fresh information.  When a blog is part of your website, it means your website is regularly updated.

Blog posts (think articles) help you focus on specific topics (think keywords) that help people find you.  A blog post with great information on one topic is a lot more likely to be found than a homepage loaded with multiple keywords.

Blog posts also create a digital footprint and remain on the web as long as your site is still live.  Newsletters have a useful life that is limited to what a recipient does with it.

#2 – Credibility

Blogs are an opportunity for you to showcase your talents in a less confronting way than an ad.  It helps establish your credibility in your area of expertise.

#3 – Generosity

And, my personal favourite, blogs are an opportunity for you to be generous and to generate goodwill.

Is a newsletter redundant?

These points do not mean that a newsletter is redundant.  Far from it, as both are important in a marketing strategy, just in different ways.  When you are crafting your strategy, consider this:-

Blogs provide information when people are looking for information, whereas a newsletter is pushing information whether the recipient wants it or not, adding to email noise.  If your newsletter starts to get annoying, you risk getting tagged as spam.  On the other hand, your newsletter arrives in a person’s inbox and prompts them to read your content while left to their own devices, they may forget to read your blog.  So the trick is getting the balance right.

 

www.coachmi.com.au

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No time to do a full review of your business?  Grab a coffee (or other warm drink of your choice!) and try this five-minute review.

Coffee

Photo credit: Grazyna Suchecka

Ask yourself these two questions:

  1. What is working?
  2. What is not working?

If it’s working, you’ll want to keep doing what you are doing, or do more of the same.  If it’s not working, you have to stop doing it, or start doing it differently.

A bit simplistic?  Perhaps.  But extremely effective if you pay attention to your answers and take some action.  Your next step will be to try the One page business plan.

 

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Coach Mi @ FB

 

 

Nothing will completely prepare you for starting a business, but there are some things that you can do to set yourself up well.  Some of the areas highlighted below are stumbling blocks in many businesses that I have observed.  While they are relatively minor, they could make a world of difference if considered earlier in the journey of starting a business rather than later.

 

Financial Buffer

Like building a house, it always takes longer than you think.  So make sure you have enough financial resources to sustain you for longer than you expect.  While some new businesses are a roaring success from day one, this is the exception rather than the rule.  In the start up phase, you will be investing funds into the business rather than drawing from it.

Running a new business is stressful enough on its own.  You don’t need the additional worry of how to feed yourself and pay the bills.  Have a buffer to cover your living expenses and whatever buffer you decide, add 6 months to that!

Expect the best but prepare for the worst ~ Muhammad Ali Jinah

 

Financial information

Computers

Photo credit: Brad Wilmot via Flickr

Saying that you aren’t good with figures, isn’t good enough if you want to start a business.  This is an essential skill.  If you think it’s not an area of strength, then learn, whether it’s doing a course, getting coached or mentored.  It’s an area that too many business owners outsource and delegate to their detriment.  Do you know what cash flow means and what happens when you don’t get cash flow right for your business?  You don’t?  Warning…… red light!!

Technology

If you are going to run your own business, start getting comfortable with technology.  Technology is your friend and is a huge time and cost saver. There are many free or low cost tools available that rely only on you being open with technology and willing to learn.  Accessing some of these tools could save you thousands of dollars, either from improved productivity or from negating the need to outsource an activity.

Support Network

Build your support network.  If you have been employee all this time, the isolation of running your own business can come as a shock.  You are it and the buck stops with you.  Good peer support networks provide moral support and the opportunity to exchange ideas.  They are also good networking opportunities.

Business Planning

You should work on your business plan BEFORE you start your business.  The planning is the key, not the plan itself.  The thinking and the research that goes into a business plan is the foundation of every good business.  You should be considering the viability of your product/service, your target market, your competition, your funding requirements, your strengths and weaknesses, your risks, just to name a few.

Business Planning articles:

 

Perhaps this post should be followed by 5 more things you should know before you start your business, but until then, I hope these have given you some food for thought.

 

www.coachmi.com.au

Coach Mi @ FB

It’s a conversation no business owner wants to have but for some, there comes a time when the question won’t go away – “Is it time to call it quits?”

Like all difficult questions, there is no simple answer and often it is as much about motivation and energy of the business owner as it is about whether a business is salvageable.  Here are some things to consider if you find yourself in this situation:

Business cycle - Start up to Give up?

Business cycle – Start up to Give up?

 

Are you moving with the times?

Insanity is doing the same thing over and over again and expecting different results. ~ Albert Enstein

If you have been conducting your business in the same manner but business isn’t going as expected, there is a temptation to focus on external events.  Yes, it is probably part of the problem, but it’s not the whole story.  There are businesses that are thriving in spite of these same factors.  So it’s worth taking a good hard look at your business – your strategies, your systems, your operations which may all need an overhaul.  What used to work for you five or ten years ago  (if you’ve been business that long) may not work anymore.

 

Have you lost the motivation and drive to do what needs to be done?

Most people start their businesses full of enthusiasm and promise, but when things have been difficult for a while, it gets increasingly difficult to stay motivated.  If you have no more energy to push through and do what needs to be done, then you could be fighting a losing battle.

If you are almost at the end of your tether, but can muster a sliver of hope, consider getting help.  This could be from a coach who could help untangle the knots in your business and help you work through your blindspots, or more practical help, such as outsourcing areas of your business that you don’t enjoy or are simply not good at.  Consider also whether there is a flow over effect from other parts of your life that are negatively affecting how you operate your business, and whether dealing with those issues will help.

Some questions to ask:

“What would it take for me to do what needs to be done?”

“What support or resources do I need to make this happen and how do I get them?”

 

“I’ve had enough!”

If, after considering all the various factors, you still reach the point where exit is your only bright spot, your options reduce to – walk away, or try and salvage something on the way out.  The second choice usually means trying to sell the business but depending on the state of your business, this could mean time and effort to get it into a saleable state.  How much you put in at this point will determine how much you get out of it.

 

When do you move on?

Take comfort that the decision to quit is not about quitting, but about moving on.  Some things in life have a “use by date”.  Acknowledge this because often the salvage cost, whether financial or not, is just too high, not to mention the opportunity cost of hanging in there.  The opportunity to do something else with your time and resources.

“Success is not final, failure is not fatal: it is the courage to continue that counts.” ~ Winston Churchhill

And “continuing” doesn’t have to mean continuing in your business.

 

www.coachmi.com.au

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I’ve seen this happen time and time again.  Managers and business owners who hire people like them, because naturally, we like, trust and respect people who are like us.  It’s familiar, safe, and predictable.

people

I read this article on Women’s Agenda this morning – “Why focussing on the team could lead to greater diversity” *, and it got me thinking about this issue.  You have to actually believe that diversity produces tangible benefits, and not just for the sake of political correctness.  That belief is crucial because having a diverse team is not a bed of roses.  Diversity means difference which can mean discomfort and tension.  It’s a manager’s nightmare and chances are managing diversity isn’t a skill that you (the business owner) or your line manager has.

If you want to get out of group think, get new ideas, progress beyond the status quo, that difference and tension is what will get you there but it’s a risk.

 

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* The link to this article has been removed as it no longer appears on the Women’s Agenda site.

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I am a firm believer in strategic alliances and the power of collaboration, and am in fact in the midst of setting up a community of small business owners to help them leverage off each other’s strengths and experiences.  As a result of my brain being in “collaboration fever”, I found myself susceptible to a marketing email that I would normally ignore.  The email was titled  “No more hype, this is PRACTICAL business strategy at its best!” and it was a promotional email about a book that was recently launched.

I was given the opportunity to buy a Kindle version at $1.97 (RRP $14.97) and I feel like a complete fool for falling for it.  Read my review on Amazon.

Sad

I thought I was buying a book about developing strategic alliances and how to use collaboration to fast track your business.  What I got was page after page of self-promotion and up-selling.  The scary thing is that the book is well-endorsed, and the purpose of this post is twofold.

Firstly, to save you from wasting your time and money on the book, but secondly, to warn you to be careful who you endorse if you are setting up strategic alliances.  These people who have endorsed the book have fallen in my esteem as a result of being associated with the book and are going on my blacklist.  I’m sure reputation damage was not a price they had intended to pay for this alliance.

As I have been typing this post, I have received an email from the author inviting me to consider a strategic alliance with her company!!  I don’t think so.

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I had written a post about the part Carrots and Sticks plays in motivation, and this post has languished in my drafts folder for almost a year.  It was complete, at least, I thought it was, but it has never seen light of day because I felt that something wasn’t quite right but I couldn’t put my finger on it.

Motivation - carrotThen I picked up this book DriveThe surprising truth about what motivates us and it just made perfect sense.  I had written about needing to have your carrots and sticks in the right balance for motivation to work but in my gut, I knew that it was too simplistic and my own experience managing people also disproved that theory.

bonus - something given, paid over and above what is due and expected

My anecdotal experience and observations about trying to motivate with financial rewards was that the rewards became an expectation for baseline performance instead of improving performance!  The number of times I have heard people complain about their bonus payments… I’ve lost count.  And it always baffled me that a bonus (see definition!)  can result in complaints.

The book talks about the evolution of motivation from survival instincts, to carrot and sticks, to its latest form, what the author calls Motivation 3.0 which replaces carrots and sticks with values and purpose.

What was most interesting for me was the proof that carrot and sticks don’t work, especially in work that is complex, requires creativity or problem solving.  The examples quoted showed reduce creativity, short term thinking at the expense of long term results.  My take on this is that the brain is distracted by the reward instead of motivated by it.

 

Motivation 3.0

Autonomy – the desire to direct your own life

Mastery – the urge to get better and better at something that matters

Purpose – to do what we do in the service of something larger than ourselves

 

The conclusion is that autonomy, mastery and purpose are far more effective motivators than carrots and sticks.  I highly recommend reading the book to find out why.  Its applications extend beyond the business world to other areas of life like exercise and parenting (which is also of particular interest to me).  Note to parents: do not give your children pocket money for chores!

Drive: The Surprising Truth About What Motivates Us

 

 

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