CHAPTER 7
people matter

PEOPLE CAN MAKE or break your business. That includes your professional advisers, suppliers, customers and clients, employees, business partners, and even your friends and family. Making wrong decisions about any of the people with whom you deal can significantly hurt your business and impede—even destroy—everything you are trying to achieve.

With regard to people, I’ve made both good calls and bad. In most cases, the bad calls were no big deal, but a few of the bad choices left me feeling angry and betrayed. There’s an old saying: Business is business and friendship is friendship, but when it’s your business, it’s always personal. Fortunately, I’ve been able to rebound from bad calls, but not all entrepreneurs are so fortunate. Some find placing their trust in the wrong people to be too devastating, emotionally and financially, to overcome.

A Story of Betrayal

A number of years ago, I personally saw the tragic ending for a friend who simply couldn’t overcome business betrayal. I’ll call her Sally.

Sally had tremendous entrepreneurial drive. She built a business from nothing in 1993 to nearly $100 million in revenue by 2006. She recognized that she didn’t have the sophistication to develop the structure and process for such a large organization, so to help her manage the rapid growth, she hired a chief operating officer. Things seemed to be going well until documents from the IRS arrived indicating she owed $2 million in back taxes.

A complicated investigation ensued, and it turned out that the trust Sally had invested in her second-in-command had been misplaced. According to sources close to Sally, the COO, who had previously been convicted of IRS fraud, failed to pay the company’s federal taxes for two years. The IRS troubles caused other financial problems, too, putting the company in dire financial straits. Ultimately, Sally left her office one Thursday evening and never returned. Her body was found on Saturday. She had taken her own life. As one of Sally’s friends noted, “Sally believed that she would lose herself if she lost her business. She had fought so hard for so many years to build that company, and she was deeply ashamed about her financial problems.”

This is an extreme story. But I feel compelled to share it because it drives home the importance of understanding that your business is only as good as the people involved with it. Surround yourself with quality people, and be careful about where you place your trust. Every choice you make has an impact on your success. Oprah Winfrey has said that she continues to sign most of the checks in her business. Sage advice from a successful business owner.

The Fork in the Road

Thomas Edison had an unusual way of hiring his engineers. He’d hold up a lightbulb and ask the candidate how much water it would hold. Some candidates used gauges, measurements, and scientific calculations to determine the answer. Others simply filled the bulb with water and then poured the contents into a measuring cup. Which candidates got the job? The ones who used the simple approach—filling the bulb with water. Develop an “Edison Test” for your business.

Small businesses often start out as one-man or one-woman shows. As the owner, you do everything from collecting the cash to emptying the trash. As your business grows, however, it can reach a point where the volume of work for one person becomes overwhelming. In terms of the success of the business, that’s not a bad thing, but it can cause you great stress and put you at risk for burnout. With only so many hours in a day, there are limits to what one person can accomplish.

This point in your entrepreneurial journey is a pivotal moment: the proverbial fork in the road. The direction you choose is going to have a lasting impact on your business. You recognize the need for additional resources to manage the business, but the thought of increasing your overhead by taking on an employee is scary. However, if you don’t take on more resources, you’ll stagnate at your current level of business.

So how do you know when it’s the right time to hire your first employee? When the business is ready. When you are ready. And when adding employees is in strategic alignment with your vision for the business.

Finding the Help You Need

You begin by going right back to your business plan and reviewing your vision. If your goal is to build a sustainable business enterprise, then it’s going to take more than one set of hands to get there. If it’s not, then it may be time to scale back a little so you can manage your business effectively and professionally by yourself. Remember the discussion in Chapter 1 about the difference between creating a job and creating a business.

Step One: Identify Your Needs

Ready to take on the challenge of building a truly sustainable enterprise? Then examine what’s happening in your business right now. Are things starting to slip through the cracks? Are you missing deadlines? Are you reaching the point of being burned out? Any of these situations can be indicators that it’s time to bring someone on board to assist you—especially if you see your currently burgeoning business levels continuing to increase, rather than being a short-term or seasonal situation.

My strategy for adding employees is what I call MYTOP, or multiply yourself through other people. Your first employee should be someone who complements your skill set so that you can focus your time and energy on the things you do well and that add the most value to your business. So before you hire anyone, identify and analyze your own strengths and weaknesses.

Here is a worksheet to help you assess your skills. It lists the characteristics needed to grow a successful business. Rate yourself in each of the following areas.

You might ask someone with whom you have worked closely in the past to fill out this worksheet about you to get another’s perspective on your strengths and weaknesses. Sometimes we don’t see things in ourselves that others can see. It certainly doesn’t hurt to have additional input.

After reviewing the completed worksheet, make your first hire someone who has abilities in the areas where you are the weakest. Most often, your weaknesses will correlate with the things you don’t like doing, so why not bring in someone who is good at those things and enjoys doing them, too?

Step Two: Determine and Convey Exactly What You Want

After you’ve settled on the skills that would be most helpful to you, write a job description for a position that encompasses those skills. Yes, I realize this is challenging because, since the job never existed, you’re not yet sure what the job is going to entail. It doesn’t matter. You still need to map out the responsibilities of the position and document it before you start your search.

To identify the right candidate, it’s important to establish your expectations. This is also important for your new employee. Without articulating your specific expectations, the chances of your new hire failing are great. And that will be frustrating and unpleasant for both of you.

During a question-and-answer session at one of my seminars on building a successful business enterprise, an attendee wanted to know why she couldn’t seem to find a good administrative assistant. She told me how several people she’d hired for the position hadn’t worked out, and she was ready to give up. She concluded that there wasn’t anyone out there to fit the job. Then I asked the obvious question: “Do you have a job description that lays out expectations?”

The woman responded with a vague “sure,” mumbled, and gave rambling explanations. So I asked again … and again. Finally, she admitted that she hadn’t actually written anything down. Voilà! Problem identified. If you don’t know specifically what you expect the new hire to do for your business, then don’t be surprised when it doesn’t work out. Take the time to draft a comprehensive job description before you begin your employee search.

Step Three: Determine the Salary Range

Before you conduct an employee search, determine the salary range for the position. Committing to a salary amount is scary. But you need to recognize that, in order to hire the type and caliber of individual who can help you grow your business, you may have to take a salary cut yourself. In fact, many entrepreneurs find they have to miss a paycheck here and there in order to make sure their employees are paid. Are you ready to make that sacrifice? It’s another type of financial investment in your business. However, if you choose employees wisely, the rewards will come because two people can accomplish far more than can one.

Step Four: Hire Smart, Not Fast

Always strive to hire people who are smarter than you are. Entrepreneurs tend to have large egos—we like to think we know it all. But the smartest people are the ones who are willing to admit they don’t know everything. And they are the most successful because they hire people who fill their knowledge gaps. Also, make sure that whoever you hire is at the top of his or her game—someone with a proven track record of success.

However, avoid hiring the big-company star. To grow your small business, you’ll need someone who knows how to get things done without a big budget and a big staff. The big-company star may look good on paper, but often they don’t know how to get great results with limited resources. They are super at developing big-picture strategies, delegating responsibility, and outsourcing tasks, but they don’t know how to dig the hole themselves. Look for someone who has worked in an entrepreneurial environment.

Family and Friends—Oh, No!

“I can’t get everything done. I need someone NOW!”

Behold the rant of the frantic small-business owners who haven’t planned to hire smart. Now they have their backs against a wall and they rush out to hire the first warm body available: Usually this means a friend or a family member. But before you decide to hire a friend or a family member, consider whether the person has the skills, experience, and core competencies you need to grow your business.

I’d say that 90 percent of the time, hiring family or friends ends in disaster. When things go awry, long-term friendships are destroyed and family gatherings become extremely uncomfortable. My two uncles didn’t speak to each other for about five years thanks to a bad business deal. Every holiday, my mom struggled with seating arrangements and made every possible accommodation to avoid an ugly scene between them. I’m sure that’s not something you want, so think before you leap into the arms of family or friends.

As a cash-strapped small-business start-up, what do you do if a friend or family member is willing to work for free or for a below-market-value salary? Remember: You get what you pay for. Typically, your friends and family mean well, they want you to succeed, and they think they are doing you a favor. But the operative word here is favor. When someone thinks he or she is helping you out and doing you a favor, then it’s not a “real” job and you aren’t really the “boss.” Chances are, the individual won’t take you or the job seriously, and could easily leave you high and dry when you need the person the most.

But let’s say that, after careful consideration, you decide the family member or friend does make sense for your business. In that case, make the employment a professional business relationship, with the roles, responsibilities, and expectations clearly defined and agreed upon. I recommend putting everything in writing, because memories are very short.

When you have a friend or family member on the payroll, personal baggage is a critical consideration. Family conflicts should be dealt with outside the office, so customers or other employees aren’t caught in the middle. And, if and when you add more staff, make sure you don’t show favoritism, because doing so will damage company morale in a hurry. When you make a decision concerning an employee who is a friend or family member, stop and ask yourself whether you’d make the same decision if you didn’t have the personal connection. It’s logic, not emotion, that must control your thought process, and with friends and family that can be difficult.

Ask yourself whether the friend or family member has the ability and desire to grow and evolve as your company expands. What will you do if your business grows and the person is no longer a good fit? Will you be comfortable letting the person go? Will the person recognize the time to exit gracefully? Think about that before you agree to hire.

Finally, consider the possibility of having to let the friend or family member go. According to Chris Kelleher, of The Law Firm for Businesses PC, a legal organization that caters to small-business people, “this type of termination isn’t ‘just business.’ It’s often very personal and can easily harm and even destroy friendships and family relationships.” He adds, “If there is no other choice than to terminate the employment relationship, then the business owner must wear two hats: one as an employer and the other as a family member or friend. Regardless of how well this type of termination is handled from both perspectives, the business owner must realize that the personal or family relationship may not survive.”

As with all entrepreneurial business decisions, the final choice is yours, but I encourage you to think long and hard before adding that friend or family member to your team. Employees come and go, but we hope and trust our friends and families are here to stay.

The Employee Turned Competitor

About once a week I appear on a television program called Good Money. The program airs on ABC News Now, and my segment is branded “Minding Your Business with Susan Solovic.” During the second part of my segment, viewers call in to the program with questions related to small-business operations.

On one program’s call-in segment, Eric, who had successfully grown his marketing business over several years, explained that he had reached the pivotal moment when he felt he needed an employee to help him manage his current workload so he’d have more time to add new clients. Eric’s hesitation about adding staff wasn’t concern for financial risk; it was the prospect of training someone on the unique strategies he used for his clients, then watching that employee take the knowledge and perhaps start his own firm or go to work for a competitor.

My response was, yes, that can happen, and it is a risk every business owner takes. Whether it is intellectual property, a customer list, or even something as simple as excellent hands-on training, employees may leave after training and take valuable information with them. (For example, my father groomed a young man in the funeral business, taking him in as an apprentice and teaching him the business for over 20 years. Then, we learned from a family friend that the man was in the process of building a new funeral home and at night was copying my family’s business files. My parents and I confronted him, and he confirmed what we’d been told. We asked him to leave immediately. He cried and said he was sorry, but the damage was done. Fortunately, as long as my parents continued to own and operate their own business, it continued to prosper, and the community supported them, while the former employee, buried in debt, struggled to build his business.)

There are two important things you need to accept when it comes to risking competition from an employee:

1. You can’t build a successful, sustainable business without a team. Remember MYTOP: multiply yourself through other people.

2. There are plenty of unethical people in this world, and someday one of them may end up working for you. It is part of the risk of building a business.

There are, however, a few things you can do to protect your business as you build your staff:

• Make your company a place where people want to work. Create an environment that’s empowering and fun. Give your staff the opportunity to profit as the business profits. When you help people to feel part of the success, there is less incentive for them to leave and they are more likely to remain loyal. (Think back to the purpose, promise, and principles of your business. They will help you establish a good corporate culture and work environment.)

• Ask employees to sign a noncompete/nondisclosure agreement as a condition of employment. Noncompete documents must be reasonable in time and scope, and you cannot bar an individual from making a living except to the extent that it is necessary to protect your business. The extent to which noncompete documents are allowable varies by jurisdiction, so it is a good idea to consult with your business attorney.

Some people believe noncompete agreements don’t provide much value, but in my opinion they minimize the risk of an employee jumping ship and working for a competitor or starting his or her own business. At least when employees sign these documents, they are aware that there may be serious consequences for actions that could cost you business. If my father had asked his employee to sign a noncompete document, most likely the employee would not have been able to launch a competing business in the same area. An important lesson learned.

Always consult with your legal adviser regarding noncompete/nondisclosure documents.

Evaluate Your Options

Instead of hiring someone full-time, you may have other options for getting help, such as temporary staffing, independent contractors, freelancers, or virtual assistants. Because these workers are not actual employees of your business, you pay only for what you use. This option can help you better manage your cash flow, because you avoid overhead costs involved with employees, such as payroll taxes, unemployment insurance, worker’s compensation, and Social Security taxes. Additionally, you may also avoid fringe benefits such as healthcare coverage, retirement options, and vacation and sick days.

Temporary staffing agencies provide the added benefit of helping you find the right employees. They advertise, screen, interview, test, and check references and backgrounds. (In fact, one staffing agency I worked with helped me more clearly define the job description for a position, which helped me to better identify the right candidate for the job.) Once the temporary employee is on board, the agency also takes care of all the payroll and taxes, so you don’t have to worry about that, either.

Among the alternatives for obtaining help may be outsourcing the work (i.e., to an independent contractor, a virtual assistant, or a freelancer). These workers may be contracted on a project basis or an ongoing basis, but in either case you still pay only for the work they actually do for you. Technically, they are operating their own businesses, and can have other clients at the same time. Plus, because they operate their own businesses, they pay their own taxes and expenses, which saves you money.

Small businesses like using independent contractors because it saves them money. However, don’t be penny-wise and dollar-foolish. The IRS looks very closely at the way employees classify workers. Misclassification of a worker as an independent contractor rather than an employee can be a costly mistake, making you potentially liable for back taxes and penalties—and possibly even criminal charges. And in some cases, misclassified workers have sued their employers for lost benefits during the time they should have been considered employees.

To aid employers in determining the correct status of a worker, the IRS has established a list of guidelines to consider. You can find them on the IRS website (www.irs.gov) but I have highlighted some of the key factors below.

• Working relationship. Does the worker have other clients for whom he or she works or does the individual work exclusively for you? An independent contractor is in business for him- or herself, so there should be other clients, or the person should at least be available to acquire other business opportunities.

• Working hours. Employees typically have their work hours scheduled; whereas an independent contractor can establish his or her own work hours as long as the contractor meets the deadline established by the client.

• Work location. Generally, an independent contractor provides his or her own work location, materials, and equipment. Although the worker may need to perform some of the work at your facility, his or her primary office is the one he or she provides.

• Execution. Employees are assigned projects and given direction on how to perform the work. They are also provided with any equipment they may need. An independent contractor, on the other hand, will determine how to complete the work and will utilize his or her own equipment and materials.

• Expenses. Employees typically submit their work-related expenses to their employers for reimbursement. An independent contractor, however, generally absorbs expenses as part of the cost of doing business.

• Taxes. An independent contractor pays his or her own taxes by filing quarterly estimated tax returns. Your company does not withhold taxes.

• Business indicators. An independent contractor should have a variety of indicators that demonstrate self-employment. Business cards, marketing materials, and/or a website are all indications that the individual is truly independent. Another indicator is whether or not the worker has established a legal entity for his or her company, such as a corporation or limited liability company.

If after reviewing the IRS guidelines you are still confused about the status of a worker, the IRS can make the determination for you if you file a form SS-8, which is also available on the IRS website (www.irs.gov).

There are other drawbacks to hiring independent contractors. Because they are in business for themselves, they may not always be available when you need them. Plus, keep in mind that if an independent contractor becomes an integral part of your business operations, and then you lose the contractor for whatever reason, you may be left in the lurch. You’ll have to find someone else and familiarize the new person with your business needs.

The Hiring Process

Once you know the type of individual you want to add to your team, have written the job description, and have decided on a salary range, you begin the search. Where do you go to find the people to help you realize your business vision?

The best place to start is within your own business network. Reach out to others whom you respect and let them know you are searching for a qualified candidate. Many business owners and managers are finding themselves in the difficult position of laying off good employees, and they would welcome the opportunity to refer those people whenever possible. (However, keep in mind the importance of identifying a candidate who has entrepreneurial experience or mindset.) Additionally, almost all businesspeople have friends and former colleagues who are in the process of a job search. For me, networking has always proven to be the best way to find high-quality individuals.

Social media sites are increasingly popular recruiting tools for small buinesses, particularly LinkedIn. I get at least six inquiries from companies each month with specific job postings; they have used their LinkedIn memberships to identify qualified job candidates. Through that website, they notify their contacts and ask for help in finding someone to meet their business needs. While I have never done this myself, I know people who have had tremendous success utilizing this resource.

Job-posting websites are another way to launch an employee search. Most sites are not very expensive and are easy to use. If you post your job opening in the newspaper, you’re stuck with whatever gets printed. Online sites, however, give you flexibility to make changes in your posting if you see you aren’t getting the type of responses you need.

Staffing agencies, although more expensive, can be well worth the money. Typically, you pay a staffing agency a percentage of the employee’s first-year annual salary. However, just as with a temporary staffing agency, they will help you refine the job description, establish a fair-market salary range, prescreen all candidates, conduct testing, and undertake the necessary background and reference checks. If you’ve never had any experience hiring employees, a staffing agency could be a smart way to go.

Hire the Best Candidate, Not the Best Job Seeker

In the quest to find the most talented employees, many business owners wind up with the most talented job seekers instead. Choosing the wrong applicant can be a costly mistake. While there is no method of hiring that guarantees you’ll get it right every time, there are things you can do to minimize mistakes:

• Brush up on your interviewing skills. An interview requires a considerable amount of preparation. Don’t “wing it,” and don’t ask standard textbook questions. Think about what it is you want to accomplish during the interview. What types of information would be helpful to you in evaluating a candidate’s ability to do the job?

• Use an evaluation sheet. If you’re going to be interviewing multiple candidates, record your impressions on an evaluation sheet. This will help you measure each candidate by the same criteria, and it will also help you keep the individuals straight in your mind. I don’t know about you, but after a few interviews, particularly if they are on the same day, I can get confused about who said what.

• Look beyond the résumé. Try not to go through a reiteration of the candidate’s résumé. You already have that on hand and can verify any of the information provided. What you need to find out is what makes the job applicant tick, and whether or not she or he is going to be the right fit for your business.

• Ask open-ended questions. Ask questions that solicit fuller responses. Take notes. Avoid the temptation to do all the talking. You want to learn about the individual. Ask what he or she liked most and/or least about the previous working environment. Find out about the person’s accomplishments. Present a typical business situation the candidate would encounter with your firm and ask how he or she would handle it.

• Assess character. One of the keys to finding the right employee is to identify who is a good fit for your company culture. The most talented individual in the world will cause serious problems for your business if he or she isn’t the right fit, character-wise. Skills can be taught, but you can’t change someone’s personality and character.

I didn’t listen to my own advice once when it came to hiring a new employee. Not only did I pay the price, but so did my team. My choice had been between two job applicants; one had slightly more digital media experience than the other, but the one with less experience seemed a better personality fit. What did I do? I hired the one with more experience.

He was a bad fit from the very first day. In the end, he slammed the door to our executive producer’s office and marched back to his office. I followed closely on his heels and dismissed him on the spot. Such behavior was not something I tolerated. Fortunately, less than a month had elapsed and the other candidate was still available. He joined the team and he was fabulous.

The Situational Interview

Situational interviews can help you to move beyond the résumé and get a better sense of the candidate’s true abilities. If left to frame their own responses to your questions, people can spin their qualifications in a way that doesn’t accurately portray how they would really perform on the job. A situational interview, however, is like a work-related test. Research shows that situational interviews are about 50 percent more effective than traditional interviews and more predictive of future success on the job. However, since they do involve more work for the candidate, don’t use them unless you are serious about him or her.

What’s a situational interview? It’s best understood with an example. Say a public relations firm is looking for a new hire. They might ask the potential employee to role-play a client meeting or write a press release. Or they might create a case study of a typical situation the employee might encounter on the job and ask what steps he or she would take to manage it.

Make sure the framework you use for the situational interview closely matches the exact job requirements. To the best of your ability, establish objective judging criteria in advance of the interview. If you have other staff members who’ll be working with the new employee, ask them to meet the candidate and provide input for evaluation, too.

The Interview Boundaries

Familiarize yourself with what are deemed inappropriate and/or illegal interview questions. Questions relating to marital status, age, religious or political affiliation, and so on, are off limits. A potential employer cannot discuss these matters, even indirectly. The Equal Employment Opportunity Commission offers interview guidelines (www.eeoc.gov). If you are still unsure of the boundaries, and know someone who is a human resources professional, he or she would be a good reference, too. Don’t think that because you are a small company, you are exempt from these federal and state antidiscrimination laws.

References and Background

Never rely on your instincts alone when judging potential employees. “Trust but verify” is my motto. Negligent hiring can lead to a lawsuit if your employee hurts someone while on the job. Failure to check backgrounds has resulted in embezzlements, stolen equipment, stolen customer identification, and, in the worst case—violence.

Partnership: Thumbs Up or Thumbs Down?

Initially, or as your business takes off, you may consider partnership as a way to build your business. There are pros and cons:

• “Most lawyers say don’t do it.” —Jeremy Nulik, editor, St. Louis Small Business Monthly.

• “Good ones are hard to find. I have had an excellent business partner for more than four years and I am grateful for our collective efforts and talents. My situation is one in a million though.” —Michelle Bain, entrepreneur and creator of Thumbs Up Johnnie.

• “Nope. Hire people. Too much trouble disconnecting, and you marry their issues as well.” —Karen Krymski, of the think tank Women Power UP!

• “Thumbs down, down, down. If you do opt for a partner, make sure one of you has the majority share even if it’s only one percent more; otherwise you’ll constantly be in a stalemate.” —Iris Salsman, owner of Salsman PR, a public relations firm.

For many years, I was totally against the idea of bringing partners into a small business. There are myriad examples of businesses that have folded because of failed partnerships. In fact, I would venture a guess that a failed partnership is among the top reasons for business failure.

A business partnership is a lot like a romantic one. When you’re just getting started with the partnership, everything appears to be wonderful—like the first blush of romance. You get caught up in the excitement, and you can’t imagine anything going wrong. But as the relationship progresses, problems and disagreements arise. Some issues are easily dealt with, but others may become insurmountable. So, while I point out the pros and cons of this business situation, it is up to you to decide what will work best for your business venture.

Thumbs Up

Partnerships created for the right reasons can help a business grow more rapidly. If you bring a partner into your business, the person should add value and in some way complement what you offer the business. With ItsYourBiz.com, I’ve had two partners, each of whom had different skill sets from my own. One was an expert in the technology field (he is deceased) and the other had spent the majority of his career building and managing sales organizations. By combining our expertise we were able to accomplish more in a shorter period of time.

When Peggy Traub, the founder of Adesso lighting, a specialty lighting manufacturer, decided to start her business, she sought out as a partner the best person she knew in the industry in terms of sales and product development. She shared with me that when she first envisioned her company she realized that although she had great retail experience, she would need a partner who knew the manufacturing and sales side of the business—an area where she had limited experience. As a result, she identified someone she knew to be an expert, and proposed her concept. When she approached him, he recognized the opportunity and together they were able to build a highly successful company.

That’s how I chose my business partners, too. Early on I analyzed what it would take to build then SBTV.com into what I envisioned, and I realized I needed both technological expertise and someone who had extensive sales experience. Could I have hired people with those skills? Certainly. But just as with many small-business start-ups, I didn’t have the funds to hire the type of skilled individuals I needed to build the business. Instead, finding partners who had these skills and shared my vision made the business development more achievable.

Partnerships bring more than just diversity in skill sets. They also provide diversity in perspective, which can be healthy for a new company. By looking at business challenges from different points of view, you often discover unique solutions. Of course, that also means you will have disagreements at times; but as long as you deal with them in a productive way, the differing perspectives can be beneficial.

The right partner may be someone who has important connections. Like it or not, as the saying goes, business is often more about who you know than what you know. So if you need someone who can open doors for you, a well-connected partner could be a smart move.

Finally, a partner may be a financing source. As you know by now, finding capital to start and grow your business is difficult. Therefore, partners who can invest money in the business can be beneficial. However, before you take any investment money from anyone, make sure you have the appropriate legal documents in place. For that, you should consult with an attorney.

Thumbs Down

The primary problem with partnerships is conflict. And it’s safe to say there is conflict in 99 percent of all business partnerships. Conflict arises over the direction of the company; conflict occurs when one partner feels as though he or she is doing all the work; conflict is paramount when core values clash. Even if you choose partners based on business needs, you can’t ignore the importance of shared values and vision. Without the right tools to manage conflict, the business will suffer significantly. Just as with a bad marriage, when the problems start, emotions run high and often emotion supersedes good judgment.

Let me share with you my costly lesson in relation to partnerships. (I refer to this as my expensive MBA.) When I had a boutique advertising and public relations firm, I landed a major client that became about 90 percent of my business. The client company was owned 50/50 by a husband and wife. The wife caught the husband with another woman—and it got ugly. She said yes to something, and he said no. My invoices stopped getting paid. The company was in chaos. One day, their employees showed up to work and there was a sign on the door informing them that the company was out of business. The two owners had left town, separately, and that was the end of the story. The company’s subsequent bankruptcy nearly put me in bankruptcy, too.

It’s Your Choice

So, if you think a partnership might be the right decision for your business, remember these things:

• You need a partnership agreement that clearly defines how decisions will be made and what happens if the parties can’t agree. The agreement should also describe how the partnership can be broken up. In other words, it is like a prenuptial agreement: How are we going to divide things up when we can’t get along anymore?

• If it’s possible, you should maintain the controlling interest in your business. If that’s not possible, then include language in your partnership agreement that requires a supermajority vote on major issues. Otherwise, you could find yourself locked out of your own company.

• Be careful about going into a business partnership with a friend or a family member. As I noted earlier, employing friends and family is a sticky issue. Partnerships are even more involved, and a failed partnership can be even more damaging.

Getting Great Advice

Starting and growing a business is a complex process, and by now I hope you’ve realized it is impossible for you to know everything. The more information, talent, and resources you can access, the greater your chances of success. Advisory boards, mentors, and business coaches can help.

Advisory Boards

No matter how small or large your firm is, you can benefit from building an advisory board. Think about the last time you met with other businesspeople and had an open discussion about your business challenges. Talking through various issues with others can often help you identify strategies you may not have seen before. An advisory board formalizes this process.

Having an advisory board is also a cost-effective way for your small business to gain critical expertise so you can adjust your course as necessary. Board members may also be able to open doors for you by utilizing their networks. Because advisory boards are not formally part of your company, they don’t run the risk of fiduciary or legal liability. The advice they share with you is nonbinding. Entrepreneurs are often eternal optimists, and while this is not necessarily a bad thing, it can have its disadvantages. Sometimes we miss the red flags because of our “can-do” attitude. A strong advisory board can help you avoid potential obstacles.

Determine how many people you want to serve on your board. Too many people often results in lower productivity. Therefore, consider having no more than a handful of people, and choose them wisely. In fact, selecting the right individuals for your board is critical. Again, consider complementing your own personal skills and strengths. Make a list of the areas where you need the most help, and use this list to identify advisory board members who can complement your attributes.

Remember to look for people who are strong enough to take unpopular stances and give you honest feedback. A “yes” person isn’t right for this group. It’s also critical that your board members understand the dynamics of a small business and the challenges of your industry. And you should consider whether you are truly willing to listen to advice that runs counter to your ideas. Many business founders are so confident in their own ideas that they become defensive and miss essential information.

To get the most benefit from your advisory board meetings, always be prepared for them. Choose a location for the meeting that is free of distractions. It’s a good idea to distribute essential information in advance of the meeting so your board members have time to review it. After your meetings, keep the lines of communication with your board members open. The fact that they’ve agreed to serve on your board means that they care about your success. Keep them updated on your company’s progress. And remember: Ideas without action aren’t worth much. It’s up to you to take action.

By the way, I sit on a number of advisory boards for small businesses and I am always honored to be asked, so don’t be hesitant to invite people. Honestly, I get a lot out of the meetings and enjoy learning about a variety of businesses.

Mentors

One of the best ways to enhance your opportunity for success is to find a business mentor. There are lots of resources providing basic business information on starting and growing a business, but a business mentor goes far beyond that. Mentors provide valuable insight that you can’t find anywhere else.

“Mentoring” is a term historically used to describe a teacher-student relationship. In the business world, though, mentoring occurs when a more experienced professional (the mentor) gives significant career assistance to a less-experienced professional (the protégé). Mentoring relationships are helpful during every stage of business development, from start-up to exit. A mentor’s knowledge, experience, tenacity, and skills offer the growing entrepreneur guidance, advice, and training. Some of the most successful business owners openly attribute much of their success to a mentor or mentors.

So how do you go about finding a mentor? Through myriad small-business organizations and associations, you’ll find structured small-business programs that provide mentors. While these are good, helpful programs, I personally think the best mentor relationships are the ones you create on your own. Now you are thinking, how do I find a mentor on my own?

Finding a mentor takes time and patience. After all, you want someone with the right expertise and experience. Start your hunt close to home. Think about your family, friends, and even close business colleagues. Even if they don’t have the experience you need, they may know someone who does. Be prepared to explain what kind of help you need or the type of person you are looking for. Reach out to your personal network, too. Once again, be specific about your particular needs. Most businesspeople recognize the value of finding mentors and are happy to help you or make suggestions.

Could your mentor be an absolute stranger? Absolutely. Think about successful businesspeople whom you admire. And they don’t have to be in your geographic area. You can enjoy a successful mentoring relationship via long distance. I’m frequently approached by people who ask me to be their mentor. Personally, I am flattered, and I think most people are.

The first thing a potential mentor will ask is, “What are your expectations?” So you’ll need to know how to answer that question. Define the parameters of what you’d like and be reasonable about time expectations. Keep in mind that if you ask a highly successful business owner to be your mentor, you can’t expect her or him to commit endless hours to you.

Also, mentors are not “answer men”—they’re not there to tell you what to do. Don’t expect them to make you successful. You’re responsible for your own success. They are just there to serve as guides.

Business Coaches

Coaching small businesses is a hot business in itself. Over the past decade or so, coaches have popped up like mushrooms after the rain. A top-quality business coach can be a tremendous asset to your business. Coaching can help you bridge the gap between where you are today and where you want to be tomorrow. A good coach can help you sort things out—what is not working and what you would like to see happen. In many respects, what you get from a business coach is the ability to develop a deeper understanding of where your magic lies.

But all coaches are not created equal. Some specialize in life coaching; others are focused on business coaching. To ensure that you get quality assistance, it is important to choose wisely. Don’t be shy about asking about their background and training. For example, look for a coach who has experience working with entrepreneurs and who has been in the business for a while. Coaching is a competitive business, so if someone has survived successfully for a number of years, they probably have something going for them.

Ask other business professionals for referrals. And before you decide to work with a particular coach, ask for references. Many coaches are picky about the clients with whom they work, which is smart. That’s a good sign, because by limiting the number of clients, they will have more time to focus on you. It also demonstrates that they understand the importance of establishing the right relationship dynamics. Most especially, it’s important to find a coach with whom you feel comfortable. You need to feel secure enough to reveal significant details about your business and your own personal feelings.

But selecting a coach is only one side of the coin. The other side is you. Most business owners turn to coaches when they have had some success in their business but they know they need to do more to get to the next level. The critical point: You have to be ready to be helped. You have to have the right mindset to benefit from what a coach can offer.

Are you ready to hear what you might not want to hear? It is a coach’s job to take an objective look at what is happening in your business and ask tough questions. The coach is also going to provide insight into how you are personally managing your business. You may not be prepared to deal with this feedback, and as a result you may throw up your defenses. If that’s the case, you might as well stop right there, because you’re not ready to be coached.

Coaches charge fees for their services, so remember that you get what you pay for. Quality coaches aren’t going to be cheap, but good coaches do have the skills to spur you on to greater success.