Operating a private business can totally dominate the thinking of its owners. Yet, the owner has only him or herself to rely on if they want to achieve all their goals, tangible and intangible, from their business.
But owners 1) can’t always anticipate what their ultimate desires will be and 2) often find the process of projecting into the future overwhelming.
Eating the Elephant in Bites – Limiting the Time Horizon
A valuable tool in this case is reducing the time horizon for the planning process. By setting personal and business goals over a limited time period, three to five years for example, it is much easier to visualize goals and put into action the steps necessary to achieve those goals. By repeating the process regularly, owners can make adjustments to account for changes in personal goals and business conditions.
The Owner Who Saw No Escape
The Podolny Group, Inc. was approached by a company that was experiencing conflict among its owners. The immediate cause of the conflict was a significant loss in one of the company’s operations. However, the root cause was a decision making process for the business that took no account of the owners personal goals.
The large loss had precipitated one of the owners recognizing that his personal goals were being threatened. Our initial work had clearly identified the root cause but the one owner was still adamant that he wanted to leave, even if it was going to result in a significant personal financial loss. Taking more time with this one individual, we found that he was personally feeling overwhelmed. He had found that he did not enjoy the pressures associated with building a business. Yet there was still the issue of the financial setback he would take if he left and severed his relationship with the other owners. We offered him a compromise.
I’ll Stay…But Only Until…
The Podolny Group, Inc. recommended to this owner group that they agree to stay together for a specified period of time (five years), with very specific goals related to the business and pay out of earnings to the owners. The terms were documented by a tightly crafted shareholders’ agreement that gave the unhappy owner a firm out at the end of the time period and a fail safe out if he found he couldn’t take the pressure. We combined this with business planning that created firm operational and financial targets and measurements.
Although the owners were skeptical that the overwhelmed owner would agree to this, he did. True to their agreement, they focused religiously on their plan, with the result that both business volume and profits surged over the next five years along with the agreed upon pay out of surplus earnings. At the end of the five years, our owner who had compromised, was ready to leave. His partners executed his buyout in a quick an efficient fashion having found his replacement because they had been prepared. Having seen the value of a time-limited planning process, they put into motion a revised plan taking into account the new partner and the changing goals of the remaining partners.
Limiting the time horizon used for the planning of owner and business goals allows owners to handle complex issues, critical to personal satisfaction that may be ignored or not dealt with because of their size and intricacy.