Whether you call it a farm, a store or a wealth engine, we’re talking about the same thing: your business. Most businesses are co-owned by more than one person. Even a business that is owned by a husband and wife is a co-ownership business.
Whether you’re thinking of transferring decision-making authority to someone in the family, you’re getting ready to sell the business or you’re thinking of becoming the owner in a business (maybe your parents’ business), you need to know what often happens.
Most people hope their co-ownership will “work out.” The statistics show it usually works out poorly: people stop talking to each other and everybody gets frustrated. Most people aren’t experts at sharing authority, and they don’t want to be. What happens if you just do nothing? If you just keep making decisions the way you’re currently making them? Things get worse. Often families break apart, people are forced to sell their business, and when people ask about it, they mutter something about a “poor economy.”
Over the years, I’ve had hundreds of people tell me about the tension in their business. Two of the biggest challenges are relational complexity and financial complexity. A successful decision-making process will help your business to succeed and will help you to have satisfying relationships with the people who matter most to you.
Imagine having business meetings without meltdowns or the silent-treatment. Imagine a day-off with someone special in your life without having to put out fires in the business. You have a choice to make. Because here’s the thing, successful decision-making doesn’t just happen.
The power of having a process to make good decisions is incredible. The following five steps will help to keep your wealth engine running with the co-owners in your business.
Identify the goals of each co-owner in the three main buckets of life (1) family/personal; (2) ownership; (3) management.
Every person finds it effortless to prioritize ONE of the buckets shown above. People rarely agree on what bucket to prioritize and the decisions that should be made. To experience harmony and success, it is essential to understand the co-owners’ desirable future possibilities.
Agree on the #1 most important business goal.
If you have too many goals you won’t accomplish any of them. If you and the other co-owners can’t agree on the #1 most important business goal then you will constantly have disagreements (many of them unspoken) about the decisions being made in the business.
Identify the obstacles and strategies to overcome them.
Your personal life, your ownership of the business and the management of the business all compete for your attention at the same time. This isn’t right or wrong, it’s just true. When you and your co-owners agree on a strategy, make sure you identify which person will have the responsibility and authority to take the necessary action.
Document authority, responsibility and accountability.
Most people have extremely low clarity on their authority, on the decisions they can make without having to check with anybody. I often hear business families say that they make decisions together. What they usually mean is that the person with the loudest voice or the person who uses the silent treatment are the ones who end up making the decision.
Identify key predictive indicators AND create a rhythm of weekly accountability.
If you don’t have a rhythm of accountability then there is unspoken tension between the co-owners. Accountability gives freedom to the co-owners to exercise their authority without other people interfering to give their advice.
What would it cost you if the poor decisions and tension just continued? Whether you’re thinking of transferring some decision-making authority to someone in the family, getting ready to sell the business or thinking of becoming the owner in a business, you can use these five steps to have a satisfying environment in your business. Any business can make better decisions by using these five steps, because they turn financial and relational tension into harmony and success.
Ian Cubitt is a Business Transition Coach. He is leading a free, video workshop in September 2017 about avoiding co-owner disaster. Go to iancubitt.com to access the free workshop.