Life Lessons Learned Number 8: From my many years in business I learned two valuable lessons:
1. If a business is to succeed, management must define its core competencies, determine its market niche, and then concentrate efforts to become a leader in that area. At the same time, management must learn to refuse new business if it does not fall within the company’s core competencies. Sometimes small companies find it difficult to turn away work because they need the business. Too often they take on jobs from clients with unrealistic expectations regarding product quality, pricing, or time constraints on delivery. There is no quicker way to end up in trouble.
2 It is also important to have a controlling share of the company in order to carry out business operations without fear of being removed by one or more partners who might individually, or collectively, decide to take the company in a different direction. If you do not own at least 51 percent of a company, you must accept the fact that you do not control your destiny, and you can be forced to leave the company on less than acceptable terms. Of course, the chances of that happening are reduced when there are more partners; convincing six owners to take action against one owner is much harder than getting one or two owners to go along with a plan to change management and force out a partner. On the other hand, managing a company with multiple owners presents other problems where each owner thinks he has the “best solution.” Can you imagine successfully managing your company by committee? Remember the old saying that a camel is a horse designed by a committee. Lastly, I learned that if you do not own a majority share, it is important to have a written agreement from other owners that you will be bought out at a fair price if the others determine that your services are no longer needed.