Rule #2: Who is in Charge?
When entering into a new business venture that involves you and one other person, it is important to make the decision about who is in charge. Ideally, the two of you should be able to make things work as equals, but too many business ventures run into problems because of the paralysis that comes from having two leaders with equal power.
On a movie set, very often there may be several producers who provide essential leadership and service. But almost always there is only one director, who is ultimately in charge on set. That is because in order for a film to be a success, it must have a concise, unmuddled vision. The same is true of your business. The plans you make for your business should not just be for tomorrow and the next day, but it should include some kind of goal or destination along with a roadmap of the steps you will take to get there.
The conversation about who is in charge can be a very uncomfortable one. After all, isn’t true equal collaboration possible?
The answer is that yes it is possible, but it is rare and difficult.
No matter how compatible you and your partner are, you do not want to go into a business venture thinking that you always will be. It can feel indecent to imagine how you and your partner may disagree. But that would be like a dating couple that is deeply in love never imaging that they will ever disagree. And going into a binary partnership is like a marriage. Both of you are building something together but there are going to be times when you want different things. When those disagreements come up, you must decide who is the ultimate decider.
The two of you should evaluate what each of you brings to the venture and decide the value of what you bring. Is one bringing in more capital investment than the other? Is one going to putting in more man-hours? Will one of you providing a greater client base?
Both of you must also do an honest assessment of each other’s business acumen. This is not a time to pull punches. Instead it is a time for honesty. Do you trust the other person’s leadership and business skill? These and other questions are important to address. If this conversation leads to hurt feelings and resentments, then it is better for it to occur before either of you have invested your time, talent, and treasure.
And it should be clear that simply because one of you is going to take on the ultimate leadership role, it does not mean that this leader is a dictator. Conversations should take place regarding how the other person will influence and move the direction of your company. It is at this time the two of you should discuss how the company could be dissolved should irreconcilable differences occur (more on this in part 5).
But once again it is important to restate that a good business partnership is like a good marriage. There should be mutual respect for both partners and both should be looking out not only for their own best self interest, but for the interest of the other and the company.