It’s terrible when the impetus for change is the death of a partner and the consequences of initially negligent agreements cannot be corrected.
A real-life case: originally, four partners were involved in producing electrical appliances. The technological processes, many components imported “off the books,” in cash—in short, a full set typical of today’s realities—were handled by one co-owner, who served as the company’s director, handling all commercial matters, one passive partner-investor, and the remaining two mutual settlement technicians responsible for production and design.
Long story short, the company director dies suddenly and unexpectedly, as always happens. The news quickly spreads across the market, and then it begins…
- Just over half of the accounts receivable and payable were in cash;
- Based on the remaining records, almost half of the customers indicated that they owed nothing and had settled with the director beforehand. They expressed their condolences and were ready to continue working;
- Suppliers also did not lose their composure and divided into two types: the first asked to settle the debt urgently, or they would stop supplying components; the second said they had not received prepayments and were ready to provide components once they received prepayment. In both cases, the remaining partners could not provide evidence that they had settled, except for the accountant’s notes that the debts were cleared by the director’s words, prepayments were made, and the cash balance was reconciled;
- On the eve of the tragedy, the director withdrew money from the company’s accounts and kept it at home for future settlements. Initially, during the police inspection, the money was noted in the protocol, but later it disappeared;
- Part of the money was stuck in companies to which only the director had access. He gave the codes for transactions to the accountant for each payment; the password generator was in his phone, and the phone ended up with the police;
- The director kept primary documentation at home that should not have fallen into the wrong hands, and it was eventually seized by law enforcement.
Pure chaos. The lives of the partners and the company changed in one day. The passive partner-investor got involved and, let’s say, not quickly and not without difficulties, but began to sort out the situation.
This group had no partnership agreement, defined zones of responsibility, limits, or roles—nothing was agreed upon and fixed on paper. Business processes between partners were not discussed. Everything moved along based on trust and words, and it probably would have continued on this path for many years; the business was successful until it hit a sudden wall.
For partnerships at any stage, it is essential to discuss scenarios for “unforeseen situations.” Although, frankly, I always wonder: What is unforeseen about a person’s death? Does anyone live forever? We are afraid to “attract negativity,” to offend each other with such an unpleasant topic, and to discuss how we will act if one of us, God forbid, dies.
In this logic, the armed forces do not need to plan for an attack or a defense plan; they do not need to develop action protocols for negative scenarios. Is there ever serious planning for positive scenarios? Have you ever seen, for example, the interior ministry of any country develop a plan where policemen give flowers to every woman on the street on the day of final victory over crime? No need to answer…
Lack of strength, knowledge, and skills? Invite an independent specialist, conduct a partnership arrangement, break down the structure of your agreements to the bones, and fix them on paper—this is the best investment in a partnership and business to protect against “unforeseen”—very foreseeable and possible future scenarios.
