What causes a business partnership to sour?

When you’re starting a business with a partner, it may seem like you two are perfectly in sync and will never have an issue with one another. The reality is that most business partners will butt heads once in a while.

A dispute between business partners can have a big impact on the company, its employees and the bottom line. How can entrepreneurs who are beginning their partnership now avoid a potential fight in the future?

Common disputes

A partnership is ultimately a relationship. Even if you and your partner don’t have a personal history, you are embarking on a relationship now. As such, the common disputes business partners face are not dissimilar to ones in your personal life.

The most common disputes between partners are money, communication and the shared and divided responsibilities of each party, which sounds a lot like a married couple. As unique as a business partnership is when it comes to interpersonal relationships, these are still common issues regardless of what kind of relationship you have with a person.

How to avoid disputes

Partners who are at the beginning of their relationship can take proactive steps to avoid these issues, or at least ensure they don’t impact the business.

Just like a couple may start their marriage with a prenuptial agreement, business partners can create a signed operating agreement to help guide the roles of each party, the appropriate compensation and what protections each partner will need as the business evolves.

You can also define how to handle future conflicts. This can open an opportunity to address the skills and personality traits each partner brings to the table and how those either complement one another or conflict. Identifying them now can help you determine the best way to avoid clashing later.

Partners should also work on drafting a values agreement, which is a declaration of your shared ethical commitments to one another. When meeting to discuss the values agreement, you can outline your personal philosophies regarding strategy, culture and growth. This values agreement can serve as a foundation for the company’s values or mission statement in the future.

These agreements and discussions can allow both parties to lay all their cards on the table and prevent parties from hiding things from one another. Without that communication, disputes could balloon to a size that it impacts the business. Working with a business attorney at the start of a partnership can help to set up the business for success by addressing all of the potential disputes you and your partner may face and creating measures to mitigate them. 

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