COVID-19 Offers Business Partners Opportunity to Realign Goals: Protecting Wealth & Employees

Spencer Tenney | Tenney Group

Prior to owning Tenney Group outright, my dad and I were business partners for eight years. We had always enjoyed a very healthy working relationship. As time went on, I began to see a very clear vision for where I wanted to take our business in the future. I desired to expand significantly in order to profoundly impact the lives of our employees, our clients, and our community, and I was very comfortable with the added risks associated with my vision. My dad saw the potential of my vision and shared my excitement; however, being 30 years apart in age, he had a very different risk tolerance. He also had the controlling interest in the business, and as a result, we held off on expanding and maintained the status quo—for a few years.

During this time, I noticed two things. First, my relationship with my dad/business partner grew colder. Candidly, I was downright resentful at times, and I often felt like I was being held back. Second, company morale began to sag. The overall energy of our work became less inspired. This caused me to become very concerned about being able to keep our top talent. To get “un-stuck,” we desperately needed a spark and a clear company vision that captured the imagination of our team.

Ultimately, it was my dad who was the one who forced the issue and initiated bold action. He recognized that our goals and appetite for risks were not in alignment and that this misalignment was affecting everyone we cared about—including one another. Unless we quickly realigned our goals, our business and our people would never reach their full potential. Soon thereafter, we took swift and necessary action and completed a partner buyout.

To protect future business performance, the jobs of your employees, and the wealth of all shareholders currently tied up in the company, business partners must get their goals and risk tolerances in complete alignment.

Many trucking and logistics companies have similar partnership dynamics. As the COVID-19 crisis continues to disrupt the trucking and logistics industries, many business partnerships are confronting a whole new set of risks exposing incredibly misaligned goals and wide gaps in risk tolerances between business partners. To protect future business performance, the jobs of your employees, and the wealth of all shareholders currently tied up in the company, business partners must get their goals and risk tolerances in complete alignment. How could business partners, like my dad and me, make the necessary adjustments to boldly confront these challenges in the face of COVID-19? Here are four steps:

1) Acknowledge Misalignment & Potential Cost of Non-Action

Reinvesting in a trucking or logistics business creates new risks. For one partner, adding new risks may put established financial security in jeopardy; however, failing to reinvest in the business may remove another business partner’s best chance to create meaningful wealth. To get goals aligned, partners must initiate a conversation to acknowledge that they have competing interests that will not allow the business or the partners to thrive. They must also acknowledge that failure to align goals will adversely affect each other and the people they care about most.

2) Shift Risks to a Capable & Willing Party

Once the partners have acknowledged that misalignment is a problem that must be dealt with, they can begin to shift risks and control to a capable and willing party. This could be to one of the existing partners, or to a third-party through a sale of 100% interest. It just depends on the available capital for partners to work out a deal. In my situation, I didn’t want my dad out of the picture. I wanted and needed his expertise to execute my vision; I just wanted control of the business. My dad wanted to play an active role in realizing the vision, but he was not willing to take any additional risks to execute it. He had made commitments to my mom, his personal health, etc. So, we took his risks off the table through a complete buyout and re-engineered his role. This new arrangement allowed us to harness all his experience, creativity, and energy to help me be successful. At the same time, if I was not successful, he would have no exposure to loss.

3) Create a Path to Wealth Diversification & Innovation

Prior to the buyout, my dad had a significant portion of his personal wealth tied up in Tenney Group. This created stress and affected his attitudes toward innovation and change. The partner buyout gave him the path to do something he never had the opportunity to do—diversify. It also gave him a huge energy boost. The effects of diversifying his risks through financial investments across other industries and wealth instruments were profound. When the weight of the world isn’t on your shoulders, creativity and innovation explode. Today, my dad is easily our team’s highest contributor to innovative ideas. I have seen this play out countless times for trucking and logistics business owners who sell their business and accept a new role from the buyer. Leveraging a lifetime of knowledge with someone else’s money is a powerful prescription for change.

4) Unleash Bold, Swift & Necessary Action

Finally, once a business is free of a partnership dynamic that is creating strategic paralysis, amazing things can happen. For starters, ownership can adapt to situations in real-time and make necessary, bold moves that separate the business from the competition. Secondly, when capital investment and risk-taking tie to a strategy that extends beyond tomorrow, we unleash the talents and imaginations of our best and brightest people. We can’t win the future without 100% engagement from our top talent. Lastly, our families, communities, charities, or foundations, who depend on our company’s future success and financial support, are protected and continue to thrive.

Conclusion:

COVID-19 did not create the misalignment in your business partnership, but it will likely exacerbate the severity of the problems associated with it. However, sometimes moments of crisis can be helpful in that they eliminate all excuses to delay necessary, bold action. Aligning goals starts with regularly scheduled communication between business partners. Sometimes it helps to use a third-party to facilitate the conversations in order to produce authentic feedback and real action. Whatever you do, start now. We are facing something in COVID-19 that no one has seen in our lifetime. The earlier you act, the more paths you will have to protect the interests of “all” shareholders and the future of the people who make your business great.  

Spencer Tenney is President and CEO of Tenney Group, an industry specialized merger and acquisition advisory firm that has been dedicated to the transportation and logistics industry since 1973. For more information, call us at 877.462.8033 or online at
www.thetenneygroup.com.

Image Credits: ISTOCK.COM/OLIVIER LE MOAL, ISTOCK.COM/FATIDO