A business that is owned and managed by a committee of people can lead to many problems and misunderstandings. By Gary Shotton #000339
Ownership By Committee (Honey Business)
By Gary Shotton
Hello my name is Gary Shotton and I’m going to name this the honey business because I had a one-hour conversation about six hours ago with some friends or a team in East Africa and they posed some questions about their honey business. We are not going to talk about the technical side of having bees and processing honey we’re going to talk about the situation they were facing.
So I asked them how is it going they said we’re making progress and I pinned on down and said can you say you’re making a profit they said we think we are and it has been nine months and then I asked who are the owners? it turns out that, there’s a committee of ten owners that seemed to have put equal monies into their honey business and in my mind i started thinking that its going to be a problem here unless there is some really clear communications so I asked more questions. Who’s in charge and how much labor does everyone put into the business, From the theory they had all agreed that they would all share the labor and I said if I had this same situation in any country in the world or any language in the world there’s going to be a problem because there’s should be somebody that feels that they’re doing more of the work and there’s going to be some in that group of ten that we would call Easy riders or along for the ride they really never intended to put time and effort into this they were putting a little money in hoping that this would be something that would be a real good investment and they will get lots of money because they put some money in so I proceeded on in my discussions
I said well have you got clear understanding who and how all the money is being handled well it wasn’t clear and then I suggested that maybe in this case of ten people they said yes there’s already some people they’re not engaged and they’re not excited about this anymore at first they were excited and guess what happened they were asked to go out on a regular basis take some labor and spend some of their time assisting in the processing of the business. This is the honey business not everyone’s going to be good at this and I suggested that they now think about earned money versus investment money what we really have here is investors that have an interest and have a desire to have extra money and invest it with a hope of a positive return on a profit but it wasn’t clear when they get the profit how would they be dispersed, a lot of confusion was starting to enter in and I could tell that they were so happy that I was helping them or talk to them, I won’t say I was making their decisions for them but I was telling them of the example I’ve seen in my own life and the examples that I’ve seen in others that are friends of mine.
It`s only a matter of time that someone is truly doing more work than others in that arrangement. So bi-sexual suggestion was that first you be very clear is this investment money? If it is investment money then you don’t have much power of decision, you have invested the money and at some point in the future maybe even years in the future you may be able to cash in your investment with the profit. at that point you can’t go into this thinking you’re going to take the profit out every month because you need to grow and that was the point. Can we grow? You have to leave the money in a business as much like blood in your body if you bleed the blood out of your body you’re going to die if you bleed the blood out the cash out of your business it’s not going to grow it’s going to die and you’re not going to have enough for everything then, I suggested that those that maybe were becoming disheartened or didn’t think this was so good may maybe instead of having 10 for sure don’t get more people investing more money to solve your problem I would suggest that you reduce the number from maybe even down to 1 well how could you do that! you can offer to buy out or buy back the money that was invested by those people that are now disinterested now.
I did tell them and I do believe at the very beginning there should have been a written plan for exiting into a business agreement like this, without investing together unless you have a clear plan or a clear way to exit. Everyone understood up, you see the likelihood of these people starting as friends even going to church together and already having great friendship and then they entered into this joint venture and at the end of any given time period they’re either all very mad at each other or very disappointed in each other are very disillusioned with each other and they’re not going to have the same relationship they had that to begin with, unless they had some clear understanding of what’s going on so there’s earned money and there’s investment money and the investors got to be willing to leave it there or have a way out and be happy with the way that the managers managing this and I suggested that there’s has to be one person that’s passionate about this and maybe this person does have the right to receive earned money they’re the ones that’s making sure this is happening at the point. I was talking to them supposedly no one was in charge well that’s not going to work very long somebody has to be in charge and they have to be first of all passionate about this in this case.
They have to be willing to do the research they have to own it as if it’s theirs and be willing to do this and even do it with a paycheck so that if they do volunteer and there’s people that have volunteer and they agree to that, then they have to have the job done. In my business if I hire someone to do a job and I set some expectation and they don’t do that job somebody has to explain to them you did not do what I was expecting at the level or speed that I was expecting and I’m not mad at the person but I’m not satisfied that the money I’m paying them is actually a value of the right amount so I hope this helps.
I hope that you would be careful when you enter into joint ventures partnerships stock or ownership whatever word you want to put on it because it’s not quite as simple as five or ten people all getting it together one afternoon shaking hands and everybody putting in $200 and hoping that doubles next year. It’s not going to probably work that way and you have to be real with it. My experience is that usually take someone with a passion somebody that’s in charge somebody that has a lot to gain and also a lot to lose. Then they could maybe borrow some money or somebody else could invest with them but that’s even dangerous I’m in favor of the community savings groups that we see happening in Africa and I’m in favor of those being the main way of funding businesses and for personal needs. Thank you for being a part of inspiring better business.
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