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Is Your Business Partner Costing You Millions?

08 August 2018

Let me tell you about how we have turned a business that was in a steady year-on-year decline to having 40% monthly growth this month – without any clever marketing strategies or an influx of sales or anything.

The key to unlocking the change was the relationship between the business owners.

What is the problem with having multiple business owners?

Many of the businesses we consult are not owned by just one individual. In fact, the majority are joint-controlled by family members or friends. Should they be trying to measure their own KPIs to stimulate growth? Well, actually, it is often the relationship between the owners that is one of the biggest obstacles to the growth of their venture.

In this particular retail business that we are working with, both of the business owners would simultaneously be focused on (or not focused on) the same activities within the business. Sales was one of the most concerning areas where this was happening. Each of them had a different sales style and were pushing and pulling the team in different directions, getting them nowhere. They were wasting hours every day by quibbling about misunderstandings, clarifying mixed messages delivered to the staff, and communicating and recommunicating what they wanted to happen.

There was one simple focusing exercise that triggered the turnaround.

The best tactic for resolving business partnership issues

“Alright, here’s what we are going to do,” their consultant said, starting off one of our consulting sessions. He pulled over the flip chart and a few pens, “Let’s list all the functions of your business.”

We spent the next 5-10 minutes listing down all the nuts and bolts that made up the machine that was their business.

“Ok.” their consulting said, picking up a blue pen. “By the end of this session, we are going to have one name responsible for each function. And only one name.”

The debate that followed was so much more fruitful than any other argument they had ever engaged in.

Here’s how we allocated the functions in their business:

Business Owner X’s Responsibilities:

  • Sales – training, management, hiring & firing decisions
  • The Showroom
  • Buying
  • Pricing
  • Merchandising

Business Owner Y’s Responsibilities:

  • Lead Generation
  • HR / Recruitment Process
  • Order Processing
  • Delivery
  • IT

“Wow,” Business Owner X said. “This makes me feel way more comfortable.”

What happens when business owners get along in the business

Now that there is a clear division of labour at the highest level, each business owner is a lot clearer on what they are responsible for.

Each of our fortnightly sessions has clear actions under each heading – and now they know exactly who is accountable for the performance of those areas.

This creates greater focus and greases the wheels in their machine, and it has let their business truly start moving in the right direction. The evidence is right there with a clear 40% growth this month and a clear bottoming out of the decline.

“Things have really turned around,” one of them said to his counsultant at the last meeting. “And we can already see that this month is going to show even further growth. The turning point has been reached!”

Not to mention that they’re both sleeping much better as well!

If you would like to discuss any of the points covered here, please feel free to request a free call below.

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We are looking to invest in good businesses.

If you would like to have an obligation free discussion about selling your business, please email shweta@growthidea.co.uk. You can find more about our investment criterion on https://growthidea.co.uk/private-equity.

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