So you want to work with a partner?

Partnership
arrangements are one of the most common forms of business and some
of them work just fine. Many don’t. In the beginning, everyone
involved is excited about the venture, so issues seldom come up and
no one wants to talk about the worst case scenarios. They are like
newlyweds that are blinded by hopes and dreams of how great
everything is going to be. Just like marriage, business
partnerships come with much emotional and legal considerations that
need to be addressed in the beginning, and it’s more than simply
who owns what. No one wants to talk about worst case scenarios in
the beginning (like bringing up the subject of a prenuptial to your
fiance), and it’s hard to anticipate all of the problems that can
occur in a partnership from the beginning. But there are common
problems that exist across business partnerships that you can
account for, such as an imbalance in the amount of work that each
partner is contributing, disagreements about the overall vision and
direction, and what happens if a partner simply loses enthusiasm
and want to go do something else. Partnerships can be hazardous to
a business’s health. In a 50-50 partnership, the partners are
obligated to buy the other one out if things aren’t working, and if
you haven’t worked this out in advance, it can create some serious
challenges and could cost you a boat load in legal fees. The key is
to protect yourself before you get into the situation you’re
currently in.

  1. If you can do your business
    without a partner (even if it takes longer), I highly recommend you
    do. There are always people that you can hire to perform specific
    functions as you need them to supplement your
    shortcomings.
  2. Do research on the person before
    you enter into a partnership agreement, and know the type of person
    you are dealing with. It’s specifically important to interview
    people that have worked for this person in the past so you gain an
    understanding of what they are like in business.
  3. If at all possible, take the majority interest and don’t
    go in 50/50.
  4. Make sure you put in a buy/sell
    arrangement into the initial partnership agreement or corporate
    structure.
  5. If you suspect that your
    partnership is about to go south, deal with it swiftly and with
    good communication. (Refer to the book Crucial Conversations: Tools
    for talking when the stakes are high by Kerry Patterson and Joseph
    Grenny.)
  6. Get a good lawyer.
  7. Think about the future, and don’t dwell on the past.
    Letting it go is difficult, but shoulda coulda wouldas are harmful
    to your future. You can’t change it, so move on.

Ed Stillman is a
Vistage Chair in Austin, Tex., working with business owners and
CEOs who are growing their profitability greater than their
competition. He can be reached at
ed.stillman@vistage.com


5 Steps to Kick Starting 2011

Much of my current reading suggests that the recession is over. The stock market is over 11,000 and most indicators are improving. Economist Brian Beaulieu, states that the next three years will bring a broad-based recovery in consumer and B2B markets. He says, “It is time to start investing in your businesses again.  Have you had a planning meeting focusing on continuing to do what you believe is best for your brand, your culture and your business?

Here’s how my Vistage members and clients are improving profitability greater than their competition by concentrating on the following:

1. Customer Satisfaction – whether or not you’ve tried and failed over the last several years, you need to measure your customer satisfaction. Do you track or know your retention rate? What percentage of your 2010 revenue came from 2009 clients? What initiatives are you implementing in December and January to jump start 2011? If history is a predictor for the future, set up key performance indicators (KPI’s) that go back 1, 2 or 3 years. Kraig Kramer’s web site http://www.ceotools.com/ is a great place to start.

2. Sales Process – My members and clients are reviewing and evaluating their sales process. If you are dissatisfied with your performance results, strip it down and build it back up. Develop a 6 to 8 step process that will encourage the client or prospect toward the desired decision. Does your process have triggers or gates that must be met, opened and closed in order for your sales team to earn the right to ask for the order? What are your internal costs for a proposal, a pilot or a finished RFQ? What is your closing ratio with current clients/customers vs. leads generated from your marketing department? Does that ratio suggest you should spend more time and marketing dollars focusing on current customers? KPI’s are critical and essential to create a predictable pipeline. Bob Davis http://simplesalesstrategy.com/ is a local consultant focusing on sales blocking and tackling. He is a Austin Trusted Advisor founding member http://austintrustedadvisors.com/

3. Communication – Are you sending via email “from the desk of…” newsletter both internal (employees) and external (customers). Consider using the US Postal Service to your customers with a routing box with titles in the upper left hand corner. Is your body language messaging positive, upbeat? Are you as the CEO or owner meeting with your top 10 percent of your customers and clients?  Peter Schutz, retired Porsche CEO shares in his workshop”…if you will listen, your customers will explain your business to you.” Each of us need to do a better job in communicating our message, and it starts with your next meeting. Have you really been “present” at the staff meetings? Did you actually help anyone to do his/her job better? Was everybody with whom you came in contact today a little better afterwards? Michael Allosso spoke to one of my CE groups last month and said” …Eyes are your gateway to their soul,” he went on to share that when talkng to a group work the room with your eyes and make contact with everyone over and over again. Hard to do yet with practice a very meaningful talent when trying to connect with your audience.

4. Leadership – Wikipedia defines leadership as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task. I like to say it is pushing people outside of their comfort zone. It’s your leverage, your ability to get things done through others is critical to your growth and company success. Starting with you, list the #1 person responsible for key role, key positions or departments such as: Sales & Marketing, Operations, Finance & Accounting, HR, IT. Then list key measurements or duties. Separate essential from preferred tasks. Then take you P/L or Balance Sheet and assign a line item to each of your management team. Hold them responsible for delivering promised results.

5. Create a fun place to come to everyday. Your “fun” culture sets the tone for employee productivity. Think about what you could do in Q1 2011 that would put a smile on each of your employee’s faces. Small rewards for performance go a long way.

What will you do to set yourself apart from your competition in Q1 and throughout 2011?

Ed Stillman is a Vistage Chair in Austin, Tex., working mostly with business owners and CEOs who are growing their profitability greater than their competition. He can be reached at ed.stillman@vistage.com

Let’s hang on to what we’ve got

It’s common knowledge that It costs you five times or more to acquire a new client than to hang on to what you’ve got. So what are you doing to hang on to your existing clients before going to chase new business?

If half of your revenue or less is coming from your existing customer base, then you may need to concentrate on providing better customer service and improving your retention rate.

It doesn’t apply to all businesses, but most of the CEO clients that I work with derive 70 to 90 percent of their revenue year over year comes from their existing clients, which means that they put a strong focus on customer satisfaction.

The first step in increasing customer satisfaction and retaining clients is to truly understand why they are buying from you and ensure that you are meeting (and exceeding) their expectations.

I tell every one of my CEOs to call on their top 10 customers and ask them why they are buying from them. I also tell them to hand them their business card and let that customer know that they have a direct line of communication to them personally. So if their promise isn’t being met, the customer should feel comfortable enough to pick up the phone and call. Realize that the customer has to create reasons in their own mind to move on to another company–but they will if they don’t feel like they are getting what they need out of the relationship.

The second step is to take the feedback from your customers and focus on what they are doing well at. Once you fully understand what your strengths are and where clients are satisfied with your service, it opens the door to new customer opportunities.

Thirdly, ensure that everyone in your organization is an ambassador–especially account managers (farmers) that have constant contact with your client base. This is your first line of defense in preventing the rock falling through the cracks and losing clients.