You Need a Shared Vision
Every entrepreneur, when they begin the journey of starting a business, has an idea of what they want to create. What it will look like, feel like. Where it will be. What it will make or sell. How it will grow. Certainly, this vision will change over time. Respond to circumstances. Latch on to new ideas. Seize unlooked-for opportunities. For the solo entrepreneur, the challenge is to be able to weed the bad ideas and the poor opportunities out from the good, when yours is the only viewpoint. For partners, though, there is a different challenge, and a critically important one - to share the same vision.
Partners may have different visions. Even after hours and hours of discussions about the business and day to day involvement with each other in running the business, partners often will have radically different ideas about the businesses exit strategy, its growth plans, even how the partnership is governed and what the relative rights of the partners are.
Partners Often Have Different Visions
One partner believes they will all retire running this business.
Another believes they will sell the company in 5 years.
One partner believes everyone is happy in the current location.
Another believes they are looking to move as soon as possible.
One partner believes there will never be more partners.
Another is on the lookout for new partners already.
One partner believes his children will join the business.
Another thinks there is an understanding they will never hire family.
One partner wants to borrow money to expand.
Another wants to pay down existing debt as fast as possible.
It is difficult to appreciate the extent to which partners in entrepreneurial firms fail to share a common vision until you have worked with many such partnerships.
This lack of communication and understanding is not the exception; it is the norm.
The failure to share a common vision is also the cause of most of the disagreements and the breakups in entrepreneurial partnerships. You may believe you are having disagreements over this or that small decision - whether to hire someone, whether to lease or rent some equipment, whether to attend this or that conference, whatever. Most of those small fights, though, are only proxy fights that disregard the real issue: you have fundamentally different visions.
Vision Informs All Decisions
Each partner’s vision for the future informs almost every decision the partnership must make. Hiring, firing, expansion, borrowing, capital, lines of business, marketing, finance – all these decisions are informed by the partner’s vision of where the company is headed. Often partners will say that they cannot begin to understand the decision their partner has made in one of these areas. The decision just seems incomprehensible. If they understood their partner’s vision for the company, though, the decision would make perfect sense.
Only by aligning the partner’s visions can we begin to create a true partnership, where each partner gives the other positive regard and trusts that they are making decisions and giving advice in good faith working toward the same goal.
The benefits of vision run beyond correcting misapprehension, though. Even partners who are on the same page about everything they have discussed have not discussed everything. Budding entrepreneurs will often have created a detailed business plan and discussed at length the company’s business operations and marketing plans and even the long-term exit strategy. They won’t, generally, have discussed the capital model, or adding partners, or how to create specific, measurable goals for the partners, or a host of other issues. The benefit of creating a shared vision is to address the areas before they become problems. Before people become entrenched.
Documentation is Critical
A final problem with the shared vision is its documentation. Too often even partners that have created a shared vision fail to have the important bits of that vision properly documented. Too often they hire a lawyer that simply gives them canned, boilerplate organization documents that the partners don’t read or understand. The partners may have agreed that, if the business needs additional capital, they will all sign personal guarantees to the bank to get it. But the canned bylaws don’t reflect that agreement. Years later, when funding is needed and one partner’s mind has changed, the agreement cannot be enforced due to the poor documentation. Poor documentation often leads to lawsuits and business divorce. It is important that you get your lawyer, and your accountant for that matter, to understand your agreements and document them clearly and correctly.
Whether you are contemplating a new partnership and want to get it off on the right footing, or you are in an existing partnership and want to get a better one, use the topics in this post and in other posts to guide discussion among the partners, make decisions about these issues, listen and understand each other’s point of view, and, most importantly of all, document the results. And remember, you’re an entrepreneurial business. Agility is your hallmark and your best advantage. The discussion you have is the beginning. You will need to keep the lines of communication open and revisit these issues as needed.
Partnerships are wonderful.