Your operating agreement: Plotting out your business relationship

When it comes to starting a business entity there is a lot to decide and like any relationship the more people the more problems that come up in the birth of your business. Regardless of the type of entity you decide to form it is critical to start an open dialogue when it comes to deciding how the important business matters of your business will be handled.  Businesses ebb and flow so while every important matter may not be a priority for your operating agreement there are a couple that are key.

Money – Like it or not money will be a running theme in your business so deciding how it should be handled is crucial.  As you start off contributions take center stage.  While the state default is that your ownership rights are determined by your percentage of contribution you can decide to split it in different ways to reflect experience, sweat equity or other resources being donated by a partner.  It is also important to decide once money or losses begins to flow how it will be divided.  Again it can just be a reflection of initial contributions but it can also work to compensate members for management or even repay initial heavy contributions.

 

Management – Just because you start a business does not mean your main skill set will be to run the business.  In a partnership hopefully each partner will bring their own wining expertise to make your team as well rounded as possible.  So if one person is the money and one is the brains you want this discussed and to be reflected in your operating agreement. You can also decide that appointed managers will be responsible for managing the entity all together.  The decision you make early on can have important repercussions especially if changes is needed so discussing it early helps sort out problems before they start.

 

Changes down the road – If nothing else is guaranteed in business change definitely is.  How your business will roll with the punches called entrepreneurship is key to long term success.  Thinking about what happens if a partner gets sick, dies, or no longer wants to retain their shares in the business give everyone a leg up instead of having to fight in the case of disaster or discord.  Note that the default to some agreements is if that if one member rescinds the entity will cease to exist to read and proceed carefully when planning for the future.

The Art of Conversation: Money, Power, Respect: Choose One

Masterminds, Bum B and QueenieA great conversation can draw you in so that you not only can see someone else’s perspective but also provide clarity for your own motives and beliefs.  Being able to have those conversations in a forum where you feel free to share and open enough to respect other’s opinions is one of the ways we can unplug and genuinely reconnect to others around us.  In this manner conversations can inspire growth in a way few forms of communication can mimic.  At last week’s Art of Conversation, the masterminds challenged everyone to think of the old order of Money, Power, Respect and give their perspective on how to choose one and the risk that comes from making that decision.

Money, Power, Respect has become an American standard on how to get the life you want.  It is what we see on TV and read in books and sing along to in music.  But is this really the right order to obtain the things you want in life?  To be sure money does a great deal in both attaining a certain level of comfort to your life and because of it is the first goal that many people often set for themselves.  Once you have it you certainly can buy a certain lifestyle or things that you want but you can never buy the hearts and minds of people with money alone.  So where do you focus to get to where you want to be to have a life that has it all or is that even possible??  Indeed the answer to that question is personal to us all.  With every start of the pursuit comes the opportunity to earn all three.  A job, for instance, gives you the ability to make money but also garner power over your assignments and respect of your peers.  By working to empower others, but just use your power over them and to receive respect by giving respect you can work to balance not just money power, respect, but how your own value system.

The great things about the conversation is that you don’t have to completely agree with someone else to get in on it.  At Thursday’s event we welcomed Bum B, a Houston and rap legend, to share in the conversation.  Hearing from someone who has seen it all it gave some real perspective on the fact that balancing the three is something that many don’t even aspire to and the perils that come in the fall when your whole focus is on just one.  The truth is that in balancing the three it can be easy to lose the other two with all your focus on one thing.  It’s why we see people with money become disrespectful such as Kanye West or people with power abusing it.  What’s your take on Money, Power, Respect???

Make sure to stay tuned to the next installment for the Art of Conversation on December 20th.