When Business Partnerships Go Wrong: Which Conflicts May Arise

business partnerships

Are two heads really better than one?

Partnering with another entrepreneur to run a business can be tricky. There are benefits to it like pooled resources, two skill sets, and two people brainstorming to come up with strategies and solutions.

However, no two people agree all the time. No matter how peaceful the partnership may seem at the beginning, at some point, there will be disagreements.

Conflicts between business partners do not always have to end badly. If both parties can be objective and prioritize the future of the venture instead of personal biases, they may be able to survive.

But, the situation can also go south really quickly. The partnership may end which might also cause the business to close. Some business partners find themselves hiring subpoena server services and bring the argument to the court.

Up to 70% of business partnerships fail. Before you enter one, it would be a good idea to find out what types of conflicts commonly occur between business partners so that you can prepare beforehand.

Different Goals

At first, business partners would agree to work together toward a similar goal. They both want to succeed and, therefore, are willing to make sacrifices and make decisions that will benefit the venture.

However, at some point, things might change. They might disagree on a lot of things. Not having the same vision for the business can lead to their downfall.

For example, one party wants to expand and franchise as quickly as possible. The other, meanwhile, chooses to not take the risk and expand slowly but steadily over time.

A situation like that would cause a serious conflict that can not easily be resolved. One person would have to back out and follow the other party’s plans or find a compromise where both partners are satisfied.

To avoid arriving at this scenario, business partners should plot long-term plans for their venture right from the start. They should decide the direction where they want the venture to head and what they want to achieve in the future. Most importantly, they should put it in writing so that, when the time comes and a conflict arises, they can go back to their original plan and remember what their initial goals were for the business.

Unequal or Changing Commitment

Two business partners who started their business when they were in their youth might find themselves having different priorities after some time. One partner, for example, got married and had kids. The other partner started another business.

Business partners are expected to share the burden of running a business equally. If they need to pour more time and capital toward growing the business, they both have to do it. They both have to make sacrifices.

However, when priorities change, one partner might be unable to give more to the business. They may want to spend more time with their family or their attention is divided between multiple businesses.

Similarly, even if both partners agree that one will provide the finances while the other will contribute in sweat equity, eventually, it might lead to disagreements. This so-called sweat equity, unlike money, is difficult to quantify. One partner may feel that they are giving more than the other.

Two parties should devote themselves to the business equally to avoid conflict.

Letting Personal Relationships Interfere

employees using laptop for discussion

Partnering with a close friend or family member in a business venture is not advisable. Although people would want to go into business with someone they trust, personal relations may not be an advantage.

Plenty of issues could arise in a business being run by close friends or family members. For example, a father who founded the business with his son may find it difficult to delegate roles and choose to do everything by himself.

Businesses, and anything that involves money, can destroy relationships. You have seen it over and over again in movies and in real life. Families feud because of inheritance. Friends fight over an outstanding debt. If a business fails, the relationship could go down with it, too.

If close friends or family members decide to become business partners, they should establish boundaries. Their personal lives should not interfere with their professional relationship and vice versa. They should also document every major decision made regarding the business. A firm handshake is not going to hold up in court. There is trust between personal relations but, when push comes to shove, having documentation will prevent or resolve arguments.

Having a business partner has advantages and disadvantages and, no matter how compatible your personalities and vision may seem, conflicts will occur. For the partnership and the business to survive any problem in the future, entrepreneurs should prepare beforehand for any potential issues that may arise.

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