Passion is the driving force for starting and planning a business. But it’s not the only thing that keeps it going: it needs to be aligned with the rules of engagement. Rules of engagement will ensure that, when the going gets tough, the business has a clear protocol of actions and priorities. Alongside passion, it is this that will determine success.
In the heady days of starting a business, passion can blind you to the difficulties that may lie ahead, including those which may need to be confronted from the outset, especially if you are entering into a venture with a co-founder or joint shareholder.
There can be a temptation to be led by a spirit of optimism at the beginning of a new business journey, but this might not last forever. Founders are often reluctant to confront some of the more difficult issues which, if not resolved before the launch of the business, can lead to conflict at a later stage. In reality, there is never a better time to face the problems head-on than at the beginning.
Alignment of interests is the single most important consideration when entering into business with someone else. Statistically, one in three joint ventures fail within the first five years. The reason most business relationships end in dispute is that people have different expectations as to what the future will look like. One may want to run a lifestyle business for as long as they can, while the other might want to exit within three years. It’s easy to get caught up in the passion for the product or service, and ignore the bigger picture.
If the co-founders’ relationship was built on their mutual passion for the business, it can be uncomfortable to discuss hypothetical situations which may appear doom-laden, such as what happens if the money runs out? Are the founders expected to contribute more? If so, how much? Or what happens if salaries need to be cut temporarily? And what is the minimum period that each partner must commit to stay involved and what are their respective responsibilities?
Questions like these must be discussed in advance to avoid later resentment and eventual dispute. Most people are uncomfortable talking about money, but it’s better to have these conversations upfront than in the heat of a crisis.
It is also vital that shareholders regularly review their business plan. The needs of the business can change, and so can the needs of the shareholders. This is how the lifestyle founder and the business founder can agree with how to move the company forward without causing resentment.
Focus is vital for any business, and asking the tough questions helps with this. Only once you all have clearly in mind what it is you want to achieve can you set your course in an aligned direction. A newly-established business can often find that, once its model has been proven, the opportunities come thick and fast, which can be a counterproductive distraction. Clarity and alignment of focus will help keep it on track.
Rules of engagement may be the flipside of passion, but they can also complement it. They focus efforts and act as a roadmap for negotiating bumps in the road. It will never be the most exciting part of starting and growing a business, but it allows entrepreneurs to pursue their passions to completion.