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How to create a strong owner group

I always start my companies along with other people because it’s my belief that people’s differences strengthen a company’s expertise, innovation and development.

The owners are one of the company’s most important assets. It’s the owners who set the foundation for the company’s existence and a long-term strategy. With strong and synchronized owners, a company has good prospects for success.

I’ve been involved in starting nine different companies and 8 of them in different ownership constellations. The first company was founded in 1997 and the last one we started about three months ago. My experiences with co-founders have been everything from a total sense of trust and the opposite where conflict and intrigue were commonplace.

In order to not be tedious, let me give you the answer directly on the single most important factor for an ownership group to function optimally.

To create a strong, synchronized and passionate owner group, you have to achieve a genuine mutual belief that everyone has the same loyalty and values regarding the company.

Can you achieve that feeling, then your owner group will succeed regardless of the challenges the company will face. Want to know more how I came to that realization? Read on…

The road to success

During my partnerships through out the years, many compromises and heated discussions have occurred perhaps because our differences. But the results of these differences can appear in different ways. Either you choose to focus on what’s best for the company or on each other’s differences. The disparities between these approaches can be the difference between success and failure.

A core value of a successful partnership is that we, the shareholders, always respect each other and our views because we are convinced that everyone is loyal to the company. This means that we do not need to think about hidden agendas, which each other might have. We never interpret each other’s thoughts, ideas and suggestions. We focus instead on how we can solve the challenges that arise along the way so that the company can be further developed and improved. The approaching focus is on the company and not the owner’s differences and needs. The individual owner is vital for the group’s existence, but the company should always be in focus and a priority.

The road to failure

Oh yeah, I’ve failed as a owner, specifically twice. One company led to bankruptcy and the other one, we didn’t manage to get the development within the company as we wanted.
I made decisions that favored me and not the company; I’d be lying if I claimed otherwise. I still made these decisions in spite of knowing what it takes to create a successful partnership and business. How can you be so stupid and to set yourself up for failure?

To have a partnership were everyone has their own agendas is like a self-fulfilling prophecy, because loyalty does no exist within the group, it becomes a natural part for everyone to just focus on each others differences instead of focusing on the company. If you are not selfish with your own agendas in such a group, you will get run over and thrown out of the company faster than fast. To attack is the best strategy, to be the only one considering what’s best for the company is then not a long-term survival strategy. In such situations it’s rare to take the company’s needs into account and it sounds bizarre, but that is unfortunately the case.

If there isn’t a strong loyalty amongst the owners everyone will instead do what’s best for their own personal gain and automatically make the assumption that it will also favor the company. You start to believe that one’s own agenda is the best decision for the company and therefore the company will be successful. If one’s intentions benefit the whole group of the owners, it will not even be considered.
No matter what your intentions are, you will end up in a dysfunctional partnership were your partners selfish intentions will become your own. You may have the strength to try and change the mindset of the group, but if the loyalty isn’t there, you will never get the group to change and work together in a constructive manner.

Towards the Abyss

There are some signs that you should pay attention to in order to know if you are heading towards the dark abyss.

As soon as groups start to appear within the partnership, you can start to see a journey towards failure. If someone within the group doesn’t feel heard, one will make sure they are heard by whoever is willing to listen.

You start blaming each other and pointing out each other’s failure. Yes, no one is perfect, but we all make mistakes sometimes. If all the owners are pointing fingers at each other instead of supporting and helping, the focus is on the wrong things. It’s never about how to find the guilty one; the focus should always be on how to solve problems that arise. The company serves not to find who is to blame, there is only one who benefits from pointing fingers and it’s the one doing the deed, the attacker.
Another classic sign of failure within partnerships is if anyone ever pulls out ”the owner card” on various occasions. Whether if it’s about getting their way or to make them heard or feel extra privileged so you can excuse their behavior by claiming that they are the main owner. Using this card within the group is a very effective and quick way to create a dysfunctional partnership.
Is it really over at that point? Is there really nothing I can do if I don’t want to end up in the dark and lonely abyss?

The slow way up

You must not misunderstand me, being an owner of a company, is by far the most priority role you might ever have. Whether you are a CEO, marketing or sales manager in your operational role, having an ownership role always has a higher importance than your employment. But you have to take your ownership role with a grain of salt, your role is actually not so important, it’s the company that’s your first and greatest priority. What you want and need should always come second. You as an owner must put the company’s needs above your own. When all the owners come to that realization, you have taken the first step towards a successful partnership.

Find forums for discussions
All information, agendas, needs and desires are all discussed with all the owners and everyone must set aside time to listen to each other. Create forums, go away and dedicate time to listen to each other. Tell each other about why you are part the company; what are your personal goals and how you can help each other to achieve these goals. How do you see yourself in the company three years from now and how do you thinking the company can help you with your personal goals? Be curious about each other and be honest so everyone together can find a common goal for the company and something that everyone will strive for.

The consensus in small groups of owners is extremely important in most major issues, the owners should be aware that it’s the main priority. If your partnership agreement doesn’t involve and support consensus decisions, you should change it as soon as possible. Without consensus, you have already built walls between the owners. And if you do not initially know each other so well and do not want to take any risks, ensure that you take the main decisions on a larger percentage than the majority.

Distinguish roles
Being a manager in an owner group is probably the hardest thing you can undertake. It’s not easy for either the manager or the owners to distinguish the different roles (see playing ”the owner card” mentioned above). As self-employed, it’s natural to hold different roles within a company and it’s not unusual to have three roles in one company.

To be able to manage the different roles, you must first distinguish yourself as an employee rather than an owner. The trick is to never represent multiple roles in different situations, but keep to your role depending on which forum and context you’re in. Are you unsure which role to represent at what time? Then ask what role you should take in the specific meeting or conversation so that the environment and you will know how to present yourself and what to expect.

For your organization to know who is who and what decisions were made by whom, a clear organizational chart with all the responsibilities and roles are essential. Then the expectations people might have can reflect the organization’s chart and know what to expect from whom.

Shareholder agreements and employment contracts
Sure, your company work well without a partnership agreement, but the purpose of a partnership agreement is not to get the company to operate on a daily basis, but getting companies to operate when problems and conflicts arise between the owners. The questions between owners come continuously and the easiest way to know what to do is if these situations have been discussed before. When signing an agreement then you have authorized the handling of these issues, so once they occur all know exactly what they should expect, which facilitates problem solving so that they can once again focus on the solution instead of discussing the issue.

I have met many companies that have been careless with the employment contracts among the owners. To be employed and be an owner are two completely different things. Divide these two roles up and be sure to write a contract that covers your employment role with the company. It’s both good for the company and for you to have a clear role and responsibility assigned to it.

To cut corners by not writing contracts can be devastating for owners who work operationally in the company, be sure to have settled the contract issues, so you will not have to worry about a conflict between the owners if one should arise.

Owner directives
Owner directives are a great way to get the owners gather around the same goals and agendas for the company. But here you have to be honest and open about what you want out of your ownership. We all are different, have different needs and goals in life. Your own personal agenda must never reflect your ownership agenda for the company, and it’s only you as the owners that can ensure that it will never happen. All owners must feel comfortable in these matters and there isn’t room for any doubt about this, because then conflicts, insecurities and problems will start to grow.

Objectives and agendas for the company go hand in hand with one’s highest personal goals. Do I want to work for the company until my pension? Do I want to sell the company at some point? Do I want to develop the company and I am happy with the way things are? Do I want to build or do I sell? What is my purpose with my ownership? These questions are many and must be answered and shared with all of the owners.

Make sure to update each other in terms of change to your owner directives, changes in your personal life, and also the purpose of one’s ownership. If you’ve had a company together for 10 years it would have changed life situations and goals. Make sure to have a partnership meeting at least once a year to discuss and update your ownership directives.

It’s not hard to be an owner

The difficult part in an ownership, in my opinion, is to dare to put your personal future and success in the hands of someone else. Being a good owner is only about two things, to trust each other and to always do what benefits the company in the long run. Just make sure that this value is shared among all the owners…

Do you have any experiences with dealing with different partnerships? Please share them in the comments below.

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