Objectivity in Business – Published in The AFR
Published in The AFR, 12th January 2013
Business partners might start with the best intentions and utmost enthusiasm for success, but it is how they deal with change that can make or break the partnership in the long term.
Something as simple as a regular meeting to check that business goals are on track and everyone still wants to be involved in the same way can be a critical part of managing partnership relationships, says business consultant Charlotte Rimmer.
Having an objective outsider in the room to help work through some of the thorny issues is a tried and true method of mediation which the director of Aide de MD says can significantly help small to medium enterprises with strategic growth and business planning.
With no hidden agendas, Rimmer says she is able to bring to the table a fresh perspective on why things might not be going as well as planned, suggest a way forward if things get stuck or out of control and address “the elephant in the room”.
“One of the most difficult challenges for a lot of businesses is the treadmill of work,” she says. “People who start their own businesses are often entrepreneurial with a lot of passion and commitment but they don’t often sit back and ask why isn’t the business going as well as it should? Or what happened to my lifestyle?
“One solution is to make sure you have critical milestones and smart goals and then meet regularly to ensure those milestones are being met,” she adds. Other critical aspects of success include a partnership agreement, complete with what do if one partner wants out.
At the direction of Rimmer, Derma Aesthetics partners Reika Roberts and Simone Vescio meet weekly – often by Skype due to one partner being interstate – to discuss their successes and challenges.
The business partners, who have worked together for three years, also meet face to face monthly to review their strategy and targets, and discuss issues within the business.
Having an independent person to help with the partnership agreement and business plan, then talk through the challenges on a regular basis, has been critical to the success of the skin-care specialists, says Roberts.
“If there is a conflict we have guidelines in place to work it out and to problem solve,” she says.
“It is easy to get emotionally tied to what’s going on. We don’t always agree with each other’s ideas but we have a process to assess things and see things differently.
“As business partners we work well on pushing each other to do the best we can but having someone independent helps bring the balance that’s required. It is easy to work hard and lose sight of our life outside of the business,” Roberts says.
Rimmer encourages business partners to talk about the company name rather than refer to it as “our business”.
“Talking about company XYZ doing something removes some of the emotion and makes it easier for those involved in the partnership to manage,” says Rimmer.
She says that qualifying the accountability of each business partner at every meeting is also important. “It is easy for someone to put their hand up to do something but then it is important to make sure it is done and within the time frame specified.”
Rimmer says every partner needs a job specification beyond “director”, which might form part of a partnership agreement.
Partnership and buy-sell agreements come in standard structures, which are adapted to include whatever the partners want to cover, says Marc Romaldi, a partner in Kelly & Co Lawyers.
Drawn up between the individuals and entities, they are legally binding and set in place a process to deal with changes in circumstances, he says.
While a partnership of individuals may just dissolve if one partner dies or is permanently disabled, if it is a company or a trust structure then the holding flows to the estate.
“It could end up being the original partner and their ex-business partner’s family running the business. To deal with that you might have a buy-sell agreement,” Romaldi says.
Without documentation, he says, there are rarely winners where issues of succession, or what to do when circumstances change, arise.
“Without timelines or guidelines around price or payment terms if someone wants out, negotiations can go back and forward,” Romaldi says.
“Very quickly the focus shifts away from running the business and generally nobody wants that.”