How to Control a Private Business

The basic (although not necessarily essential) element of control is the legal basis of authority. A business should be operated through a legal entity which provides its owners limited liability. The legal documents that set up the entity and the statutes of the state in which the entity is formed will provide certain procedures and define certain authority for owners and managers of the business. As with all legal authority, these charter documents and statutory provisions will be effective to the extent they are known, respected, and observed. If they are ignored, the effort and cost of enforcing the provisions will inhibit the effectiveness of the provisions.

The practical aspect of control generally has to do with a change of status or other results that can be imposed upon a person. If you have the ability to change someone’s status, regardless of how that is done, then you have a degree of control over that person. This might occur whether or not you have the legal authority to act. For example, you may not be an owner, but if you have unfettered authority to terminate the employment of a person, you will be able to control that person. Also, control can come from the act or failure to act of other owners. If an owner agreement gives you the right to purchase the interest of another owner in certain situations, that right to purchase might provide you with control over that owner in those situations. If you are the holder of the majority ownership interest, but the holders of the minority ownership have certain rights in certain situations (such as the sale of the business), to that extent control for the majority interest holder is lessened. It is also true that if you can influence someone who has control, then you also have control.

The primary way to control a private business is by providing leadership through policymaking. Leadership is provided when owners articulate their values, engage in group decision-making, and document their decisions with a written strategic plan, which provides a shared vision of what the business should accomplish. The managers define goals from the strategic plan and establish mileposts to monitor the progress of the action plan. Where there is a failure to meet a milepost, the action plan and possibly the goal must be reconsidered and the plan revised. It is this procedure of monitoring and revising that establishes and maintains the control of the policymaking owner. This control can be lost if leadership falters through unwise practices, poor decision-making, or inattention.

Policymaking-owners who exercise effective leadership will control their private businesses because good decisions representing quality strategic thinking will yield better financial results. Better financial results will affirm control and increase the value of the business.

The Last Straw – Staring at the End of a Business Owner Relationship

This is about the last straw. We all know the saying “it is the last straw that breaks the camel’s back.” Think about when you have said “that is the last straw,” the next thing you did was emotional. Often an emotional response is harmful to a relationship. With respect to your relationship with other business owners, think about what it would be that would make you say “that is the last straw.” Think about it and visualize it, because you should do everything you can to avoid that situation. Being in that situation may cause you to react with a harmful emotional response that will do traumatic and possible terminal damage to your business owner relationship.

So what should be done to avoid ever getting to the last straw situation?

A business owner dispute occurs when decisions made by each owner conflict. For a group decision to be made, there must be a consensus of individual owner decisions. The resolution of differences in individual owner decisions is essential to effective group decision-making. If the attempted resolution of these differences involves an argument about conclusions, the chances of resolving the dispute defaults to an exercise of power as opposed to a resolution of differences. The dominant owner prevails. For a variety of reasons, this form of resolving the differences in decisions is not effective or sustainable; moreover, it is likely to produce the straw that breaks the camel’s back.

Business Owner Disputes

Sometimes business owner disputes become “business divorces.” Business owner disputes are toxic to the sustainability of a private business. As with any other relationship such as friendship or marriage, it is common and human nature to experience conflict within the relationship of business owners. How does the conflict escalate to a dispute? How does the dispute escalate to the sudden end of the relationship?

My experience with business owners is that disputes start with assumptions. Many owners will assume that because other owners are in the same business with somewhat similar experiences that they share the same values. Because people usually do not have conversations about their values, often whatever assumptions owners have made about one another go unchallenged until the day comes that the assumption is proved false. At this time the holder of the assumption feels a sense of betrayal, even though there has not been any expressed misrepresentation. Often this feeling of betrayal goes unstated, and things tend to worsen until feelings are declared with emotion and little empathy. Both parties feel wronged and the polarization increases.