THE "SEVEN Cs": PARTNERSHIP DANGER SIGNS - The 4th C: CUMULATIVE
MONEY PROBLEMS
A series of articles exploring the seven critical areas that can
indicate a partnership is in trouble. The 4th C: CUMULATIVE
MONEY PROBLEMS Conflicts over money are very high on the list of
reasons that 70% of business partnerships fail. I'm not
referring necessarily to lack of money. The damage to business
partnerships stem from the fact that each of us have different
attitudes about money and therefore handle it in different ways.
The most hopeful scenario is that differences have been
discussed openly at the outset of the partnership and are
continually a topic reviewed with level heads. Most often that
is not the case. Here is a sample list of the types of problems
businesses run into around money where partners can have very
opposing views: *financial risk taking*collections*investment of
profits*family involvement on acquisitions*under-capitalization/
involving outside investors*perceived inequality in remuneration
of each partner based on each one's view of each other's work
and responsibility*hiring and salaries of employees*investments
in outside experts to train, coach, market, etc. The money
issues in business that accumulate over the course of time are
based on many factors, some personal, some internal to the
business and some on outside forces beyond anyone's control.
Bill and Vincent were investing in a new business. Vincent was
unemployed with limited funds, so at the outset Bill did the
financing. There was growing tension between them because of
this. Bill felt he had more right to make decisions. He also had
a subtle way of belittling Vincent because of it. How could such
interaction be a good basis for a new business? They were wise
enough to seek coaching, during which I helped Vincent spell out
the behavior that was not obvious to Bill. Vincent on his own
was too uncomfortable to communicate clearly how he was feeling.
When it was out in the open in our coaching sessions they were
able to make some changes so Vincent was able to contribute more
in ways that made him feel respected. They also set some goals
and deadlines for adjustments in the financial contributions.
Open communication in this scenario prevented problems from
escalating into major conflict which could have ultimately ended
the partnership. Partnership agreements can go a long way to
spell out how money decisions will be made. However, partnership
agreements are not very efficient in predicting how
personalities will react in various unforeseen situations and
crises. Protect your partnership as much as possible. Choose
your partner wisely. Choose your business wisely. Engage a coach
early in the process. Here are some of the ways it will pay a
high return on your investment: *make sure partners are on the
same page and well suited*discuss important issues unique to you
for the partnership agreement*improve communication and as a
result focus on the smooth functioning of the business instead
of on personality issues*better and more efficient decision
making and problem solving*greater commitment to the end result
and less time wasted in disagreements and problems*more pleasant
atmosphere carried over to employees, clients and
vendors*devoted employees*better service resulting in increased
bottom line Do you have a challenge around your business
partnership or any other type of partnership? Give me a call or
send an email. I offer a complimentary coaching session so you
can find out if it's the right vehicle for you to move to the
next level in your business and relationships.