If your not sitting down with your Business Partners to collaborate on direction, agreements, leadership and other terms once a year? Your likely setting your business partnership up for certain failure and possible major disagreements. If your willing to ask hard questions up front and use my suggestions in this post? You will walk away with a impressed Business Partner and a solid relationship foundation moving forward.
Accounting is Accountability
I am very aware most Entrepreneurs in small business more than likely are Financial illiterate. They have no way of knowing what they are doing right and what they are doing seriously wrong. The first step in building a Financial Foundation is to take a Accounting class online or at a local community college immediately. Having trouble absorbing the information? Take it two times if need be. Learning these lessons are the foundation for business literacy. Education will begin your financial knowledge foundation. This simple task is often over looked and sadly dismissed as unnecessary. Usually by ignorant and or over confident entrepreneurs doomed from the beginning.
Your Accounting course will begin shaping your thoughts and questions in finance and business. Meaning you will become curious and personally teachable like myself. Figuring out through extended time and gaining more experiences “How business really works.” You need to be aware of when you may be getting robbed in a Board room and a fancy pen with unforgiving businessmen who have blank unemotional faces. I know what your thinking? Harsh? Yep! But I have to prepare you for the reality. I know you probably think I am completely nuts! Because of me slipping that in there. But truth is I have to keep you on your toes.
Being able to take raw numbers and data organize them in excel spreadsheets. Is how you make sense of business numbers and Profit Loss P&L Statements and more projections. Most entrepreneurs fail to consider metrics and numbers. When you can evaluate and know the numbers. This undoubtedly makes you more valuable and attractive as a Business partner. Speaking of partners and investors in business? Your bound to have disagreements. But most times its easily negated by active listening and personal collaborating.
Are You Creating Your Own Business Disasters?
Maybe you have been building your business, maybe you have spent your life savings and built a nice little business with a income stream to match. But you have one problem. Your margins are not allowing your business growth. What do you do? You have a few options. Keep growing at a small rate over time. Risking possible bankruptcy. Or B. Recruiting a Business Partner who can invest Capital or other possibilities to help you grow it fast. Example: Let’s say hypothetically your sitting at a table across from your new capital partner and She or He offers you $150,000 dollars to begin scaling the business. Do you take the money? Or do you ask more questions and try to collaborate? It seems likely many Small Business owners have difficulty in situations like this. If you go look at Business Equipment Financing websites? It’s littered with confused entrepreneurs who have made poor capital decisions. They just did not ask enough questions and did not use metrics.
I would first ask A.”How can we grow this together as a qualifying collaborative question? And B. “What are you looking for in return for investing this money?” Asking these starter Questions are great because they take you deep into collaborating together. Building a solid partnership. But for now let’s hypothetically say you do not take my advice. And you end up….Smiling at your new partner, take the check shake hands. Leave the meeting. And get busy scaling your business to new heights.
But! There is a problem. YES!! YOU HAVE A HUGE PROBLEM!! You have have no mutual understanding. And you have “NO PARTNER or Terms AGREEMENT!”
Agreement’s Mean Collaborating.
Ok let’s say you left that meeting deposited the 150 thousand dollar check in to your business account and began scaling your business right away. A little time goes by and your small business is honestly becoming bigger than you ever thought. The stream of cash flow coming in to your business accounts receivable. It’s powerful. LOL It’s wonderful. Then you get a call out of the blue. It’s your Partner. He or she is confused and annoyed and down right borderline furious. Your partner wants to know “WHY THEY HAVE NOT GOTTEN ANY INTEREST’S PAYMENTS?”
You assume you have been a responsible business owner and think to yourself “No problem. I got you!” And ask your partner “How much do you need for interest payment?”. Your partner responds “I need 25.00% percent on the principal.” And just like that! Your life and future business starts to crumble and spiral out of control all from the fact you failed to negotiate terms on the money. And you failed to negotiate your Partnership Agreement. Whoops. Shaking my head. Now you begin seeing doing a little prep work goes along ways.
The Sit Down
There is a reason the Italian Mafia or Cosa Nostra was very effective in business. They were great because they had the sit down! They had behavior Guidelines. Michael Franzese has some genuinely great content. I would highly suggest reading his books.
In the video above your gonna learn some invaluable business advice. And I mean invaluable. So pay attention Capeche? Good! Im gonna stand on my soap box for a second here and share with you some invaluable advice and experience. So pay attention please. In the Military you learn real fast that you will be punished severely for not taking responsibility for anything and everything and everyone as a team. So I suggest you take responsibility for your partnership and team. Recruit a Business Attorney to help you negotiate and prepare your interests for success. Instead of ending with headaches and certain failure.
Did you miss my Post about Creating Trust in Business Negotiations? It is a must read for anyone in business.
Back to military service punishments for a second. This is funny in a dark way. Their is a underlying theme to being punished in the military. And this transfers to almost every other part of your life. You are responsible for your behavior and all your future outcomes. This means taking responsibility for anyone, everything, and everyone associated with a goal in mind as you move to that objective as a team. If something falls short. Your mission is disrupted by a mechanical failure. Something breaks? Doesn’t work correctly? Even if something isn’t your fault? Step right up! Spin the wheel of certain misfortune. Guess what? It’s your failure! No one else’s. lol It’s 100$ definitely a cruel way to learn. But it does work.
The Knapkin Contract In Business
If you don’t have a contract or a Agreement written down? Tough Luck! Your Busted Out! Don’t be the victim.
Back when you first sat down and your Partner offered to give you $150,000 dollars to invest in your business. You should have taken the initiative to draw up a knapkin agreement. Negotiate favorable and collaborative investments terms while writing these terms out on a piece of paper at the table with the person offering you the money. You can do this in a Restaurant or anywhere a knapkin is available. At the end of your desired agreement you both sign this binding ad hoc legal document. Then take this document and have your Business Attorney finalize it as a formalized, and signed. This is how you should have done it in the first place.
Capitalize on this opportunity. Don’t ever feel the need rush things and always make counter offers. And do your best to prepare questions and what if’s to protect yourself and your new partnership moving forward. I hope you did gain something or some foresight with this post tonight. Thank you for reading everyone. Please do suggest a topic you would like for me to cover. I would be happy to do so. Email me at JamesonDocSharp@gmail.com
Goodnight & Goodluck!
JS