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The Seven Cs : Partnership Danger Signs
Conflicts over money are very high on the list of reasons that 70% of business partnerships fail.

by Dorene Lehavi, Ph.D.
Contributing Author

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.        
(article continued below ...)

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, vendors and devoted employees
  • better service resulting in increased bottom line

Control Issues

When control is in the picture it is a lose/lose proposition.

First, it is an illusion that anyone can control a person or a situation. The need to control is born of fear, lack of trust and insecurity. A person who feels it is necessary to control is robbed of a sense of well being. In business, control or the attempt to control can occur in many venues.

The attempt to control can go on at the top between partners or anywhere else in the organization where two or more people work together. It may be between a group of managers, or between a CEO and direct report. It can be a manager and the team for whom he or she is responsible. It might be an owner CEO and stock holders, or a member of the board of directors. Family members such as siblings often attempt to control each other, or a father hands the business to his son, but won't let go of the reins.

When someone attempts to control, they expend enormous mental and emotional energy to hold things within boundaries. Controlling behavior is constrictive and confining. It takes its toll on one's ability to function in a healthy, stress free and creative manner.

In business where the desirable goals are growth, expansion and creativity, this constricting behavior imposes the loss of these elements and seriously affects the bottom line. Here are some ways in which this loss is manifested:

7 Ways Controlling Behavior Affects the Bottom Line

  • Unhappy, controlled employees do not work to capacity.
  • Unhappiness breeds stress, illness and costs in sick leave and lack of productivity.
  • Increased turnover is costly. Often businesses do not calculate the enormous costs around turnover such as costs for advertising, loss of the revenue until a new person is hired, trained and moved up to the level of the prior person, as well as a compensation package. There are higher taxes for Workman's Compensation when a business has employees leaving.
  • Loss of clients who liked that person may leave.
  • Projects that were left unfinished may never get completed.
  • Demoralization of employees left behind.
  • Overall lower level functioning when top managers and CEO's stifle the atmosphere by controlling behavior

An example of controlling behavior is Lance, who was promoted to manager of a department in the bank where his expert financial skills earned him recognition. However, no one thought about or realized his people skills were not developed. He had never had any training in how to be a manager. Now faced with his new challenge his previous level of self confidence diminished to zero. But since he didn't want anyone to know it, he remained hidden a lot in his office, didn't interact in a personal way with his team members, and micro-managed them by requiring them to get his ok on everything they did, even ordering paper clips. The result was a demoralized, low functioning team made up of disgruntled members who felt devalued and lacked motivation to be creative and productive. This type of control, as in all controlling behavior, besides debilitating to the individuals involved, negatively affects the bottom line of the business.

It is more cost effective not to place people in positions requiring skills and talents beyond their present level. A more positive solution would be to offer the candidate for promotion the opportunity for personal development through coaching.

When partnerships are made up of family members it is even more pronounced. For example, older siblings may boss younger ones. They may diminish, victimize, browbeat, threaten or protect. Younger ones may be defiant or fall victim.

Obviously, not only their relationship but the business and all of those involved in it will pay the price.

How To Stop Controlling Behavior

  • Having a coach on board helps the controlled person let his feelings be known in a non-threatening manner and also helps the controller grow from these revelations.
  • Learn to build trust with the client(s) through coaching.
  • Encourage productivity and creativity by showing how to value and appreciate each other.
  • Learn how to delegate without fear of loss of stature
  • Encourage input and creative ideas and the permission to do them
  • Show a top executive that if his team members out perform him it reflects well on him. It may also secure his positioning for promotion because his department will be left in good hands thanks to her good management skills.
  • Address the structure of the partnership or team to ascertain if it is in alignment with the vision and goals they set for the business and is in sync with their values.

Coaching can be beneficial for anyone in an organization who exhibits controlling behavior. The first step to getting the behavior under control is self-awareness and that can be accelerated with the help of a coach. Then, as awareness is developed, previously negative situations can be turned around to be win/win for everyone.

 

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Dorene Lehavi, Ph.D. is principal of Next Level Business and Professional Coaching. She coaches Professionals and Business Partners and teaches teleclasses on techniques to break through barriers to the next level. Dr. Lehavi offers a complimentary coaching session so you can experience how coaching can work for you. Contact Dr. Lehavi at Dorene@CoachingforYourNextLevel.com or on the web at Http://www.CoachingforYourNextLevel.com  Subscribe to Mastering Your Next Level monthly e-newsletter at http://www.coachingforyournextlevel.com/newsletter.html 

October 25, 2004

 

 

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