In personal relationships, people often find someone who really pushes their emotional buttons, and then spend the rest of their lives working out their issues. That pattern doesn't work well for business relationships.

Business relationships need to be productive. The Three-legged Stool analogy was really written for business relationships. In business we can focus on patterns of success, our values, and the reasons why we have the relationship.

In business, everyone understands why they should listen to a lawyer. We're experts at writing contracts to define business relationships. We put a lot of thought into how businesses work.

Part 1: Building Your Company.

We all know companies like Google, Microsoft, Pepsi and Walmart. They have invested in promoting their image and their products. They employ thousands of people, and their systems seem to work. Best of all, they make a lot of money. What are they doing that you aren’t?

As a lawyer, I am going to give you a universal business model. I have two reasons for this. First, my model will help you think more clearly about each of the separate elements of your business. Second, my model gives you a framework for relating new ideas to things you already know.

Many of you are familiar with the pattern Michael Gerber introduced with the E-Myth. The division of Leadership, Management and Production is a proven concept. As a result, the E-Myth pattern is a good starting point for business modeling. I am going to help you build your company in three phases:

  1. Leadership: I want you to work on the design of your company. Let's begin with four functional areas:
    1. Revenue: How will your company make money?
    2. Marketing: How will your company attract new clients?
    3. Products: What will your company sell and how will those products be designed and produced?
    4. Operations: How will you manage your employees and fulfill your clients' requests?
  2. Production: Someone needs to do the actual work.
    1. Revenue: Which employees generate revenue, and are they maximizing their time producing revenue?
    2. Marketing: Which employees market your company, and are they maximizing their effectiveness every day?
    3. Products: Who is producing the company's products, and is production meeting company standards?
    4. Operations: How is everything else in the company running?
  3. Management: How does your company motivate people and connect them with your company's systems in each functional area?

With those three phases and four functional areas, there are 12 different boxes that we can talk about. I can teach you about the systems and processes that successful companies use. We can get very specific. We can take specific action. We can measure. We can analyze. We can improve your company using that matrix. When we finish at that initial level, we can expand the matrix to cover additional categories.

Reader Comment:
Thor said:
Yes, I am familiar. I have set up non-profit companies, and I have helped companies apply for the different tax exemptions and benefits that are available.
(join the conversation below)

Part 2: Engaging Customers and Vendors.

Remember that your success as a business is not just about what you do. The measure of success is how your customers respond. You need relationships with customers and vendors to fulfill your mission as a company.

Let's start by looking at three topics:

  1. Profiling: Who are the people with whom you want a relationship?
    1. Identify the characteristics of an ideal customer for your business, so that you can target the customers you want the most.
    2. Create standards for vendors, so that you choose companies that will do a good job for you from the outset.
  2. Engagement: What is your strategy for initiating a relationship? What is your strategy for continuity? These strategies cover everything from software platforms to contracts, if applicable.
  3. Influence: How do you expect to change your customers and vendors? You can develop a strategy to influence their buying habits. You can influence them to refer business to you or talk about you in social media. You can do things for them, too, by educating them and helping them improve their businesses.

Keep in mind that working on your customers and vendors is a separate subject from working on your business. They have different processes and strategies. They have different interests. If you can keep your thoughts about the second leg (them) distinct from your thoughts about the first leg (you), you will be more effective in dealing with them.

Part 3: Building Relationships in Business.

Building relationships is the most exciting part of the 3-Legged Stool. If you like people, then realize this: your company is paying you to make friendships. Don’t let that opportunity go to waste! I want to help you enhance those relationships in a way that builds sustainable growth and success.

We work on our companies. We also spend a lot of time thinking about our customers. But relationships are where the ACTION happens!

Be sure that your business relationships have a direction or a focus, so that they will deliver as much value as possible for you. Why does a particular relationship exist? If you have read Simon Sinek’s book Start with Why, you will understand how important that question really is. The answer is never just to make money. Behind your most important investments of time, there is always a value that you are pursuing.

Now, let me offer you two potential structures for your business relationships:

1. Commerce model. In the commerce model, your company will be exchanging something with another company. One of you will pay the other for a product or service. The commerce model is very easy to set up. The more clearly you define the price and the product or service to be delivered, the better the relationship will be. A well-written contract can be a powerful tool for ensuring that you start with the same understanding.

We can address setting up good commerce-based relationships when we talk about your specific business model. I can provide you with direction for employment agreements, standards for accounting and HR agreements, and so forth. The specifics can help you set up the relationships to maximize your success.

When you pay someone for a product or service, they become your vendor. There are specific processes you will want to incorporate for interviewing and selecting the right vendors.

When someone pays you for a product or service, they become your customer. Marketing and sales processes are the way that we ensure your company follows best practices for engaging and satisfying customers.

2. Team model. In the team model, your company will be working with another company toward a common goal. On a team, the members' contributions and compensation may or may not be equal. A team whose members have different skill sets can be difficult to set up. It can be difficult to induce other companies to join your team. Most businesses only work effectively with others using the commerce model. But to reach the most ambitious goals, a team may be the only way to bring together the right set of tools.

The key to creating a team relationships lies in defining the processes. That way, each participant can clearly understand where their contribution is critical to the success of the entire team.

Rewards function differently in the team model, as well. Since your team members won’t be paying you for each product or service you deliver, motivation has to arise from the success of the team. So there must be a core of shared values, and there must be a way for each member of the team to benefit each time the team wins.

I have both types of relationships. I pay my employees and vendors using the commerce model. My clients pay me using the commerce model.

I also have friends who solicit my company and refer clients to me, because they know and trust me, and we have a strong relationship. I don’t pay my friends for referrals. I appreciate them as a result of what they do for me; and I reciprocate by doing things for them.

Would you like to be a member of a group like that -- high-performing business leaders in your area? They need not be people you would list as customers or vendors. People on this list generate lots of leads for you, because they are connected and because they don’t compete with you. They like you. They trust you. And they tell people to use you, because you are the best. These are your best friends in business. What would it do for your business if you had 20 people who fit the profile of your best friends in business?

Are you ready to put a relationship plan into action with the people you know (and people you want to know)? We are going to talk about doing just that in my next blog post.