Family Business Matters       11/13 04:56

   The ABCs of Business Ownership

   In addition to capital, attitude and behavior are two other components to 
the farm business ownership equation that need to be considered.

Lance Woodbury
DTN Farm Business Adviser

   When we think of ownership in a business, we tend to focus on financial 
components -- for example, shares of a corporation, partnership units, capital 
accounts, appraisals or valuations, equity or net worth. Key questions center 
on one's capacity to participate in the financial life of the organization. 
This is the "C" for "capital" in the business ownership equation.

   There are two other components of the ownership equation. Both try to get at 
the less-tangible aspects of ownership and attempt to answer this question: 
Beyond the money, what makes one a good business partner? The query is relevant 
whether you are considering family members or key employees as new owners in 
your company.

   The two additional criteria are "A" for "Attitude" and "B" for "Behavior." 
You've probably already considered a prospective owner's knowledge, skills, 
background and trustworthiness. These additional characteristics go a bit 
deeper.

   "A" FOR ATTITUDE

   As you consider future partners, how would you characterize their attitude? 
Do they approach their work with enthusiasm? Are they fully engaged? Are they 
generally excited about the future? Do they see the glass as half full or half 
empty? Many business owners would take a partner with the right attitude over 
other factors such as education or experience.

   Similarly, how do they respond to challenges or setbacks? Are they able to 
rebound from adversity and learn from their mistakes? Or, when challenged, do 
they become shrouded in a bad mood that brings everyone down? When the going 
gets tough, you want partners with a good attitude about the future. Will the 
way they approach opportunities, especially problems, enhance your partnership?

   "B" FOR BEHAVIOR

   Another consideration is how a potential partner behaves. The distinction 
here is not whether their behavior is good or bad, as it is easy to rule out a 
potential partner who exhibits poor behavioral choices. Instead, think of 
behaviors you hope a partner will demonstrate.

   For example, one behavior involves taking responsibility for broader 
opportunities or challenges in the business. Early in my career, I saw a chance 
to hire someone else in our company who I thought would be a good fit. While it 
didn't work out, I'll never forget the CEO thanking me for "acting like an 
owner" in trying to bring value to the company outside of my division.

   Another behavior is whether a prospective owner acts sacrificially. Will 
that person give up something in the short term if it helps the organization? 
It might be pay or time or a chance to do an easier task or job. He or she gets 
the idea that some pain now can pay off in the long run.

   Yet another behavioral characteristic is what I call "low drama." These 
people don't get upset easily, they approach problems rationally, they limit 
their complaints and don't gossip, and they offer solutions along with 
identifying problems. Finally, they think long term and can articulate "second 
order" effects, where they consider the future implications of a decision, not 
just the immediate consequences.

   To sum it up, both attitude and behavior are captured in the idea of 
"psychological ownership." The way potential partners express their outlook and 
how they act in the business shows they already think and behave as an owner 
long before they have made a financial investment.

   "C" FOR CAPITAL AND CONSIDERATION

   Attitude and behavior might be harder to quantify than capital, but they are 
just as important as the financial resources an owner brings to the table. All 
together, these three components offer a multilayered approach to considering 
new owners in your family company.

   
Lance Woodbury can be reached at lance.woodbury@pinionglobal.com 

    




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