You probably have high hopes for your business as you work to get it off the ground. But the excitement of forming your new endeavor shouldn’t blind you to the risks involved. If you don’t consider some of the challenges that you could face and adequately plan for them, then you put yourself at risk of trouble later on.
This can be especially true for those who enter a partnership. While this business structure can help you raise capital, increase the expertise brought to your business, and allow you to retain significant control over income and business decisions, disputes amongst partners can arise at any time and sometimes without notice.
How can you avoid those disputes from derailing your business and your future? Let’s take a closer look.
Tips for avoiding partnership disputes
To properly prepare for and avoid partnership disputes, you must be thorough and diligent in your planning. Here are some tips for doing that:
- Be sure to compare goals and values: Before embarking on your business endeavor, you and your partners should compare values and goals, such as leadership styles, desired work culture, marketing strategies, and ideal growth opportunities to ensure that they align or are at least satisfactorily compatible. It’s also helpful to deliberately re-assess these goals and values over time so that you can make needed changes when partners modify their views on how the company should operate.
- Prepare for the worst: Although you hope for the best from your partnership, you should expect the worst. That way you have built in contingencies in case things go wrong. So, think through what you and your partners would do if your business experiences significant financial loss, a partner is accused of wrongdoing, or a partner passes away. This will give you and your partners a certain level of comfort knowing that you have a backup plan in case something goes wrong.
- Communicate when issues arise: This sounds simple enough, but many partnership disputes arise because partners simply fail to talk to one another about pressing issues. In the early stages of business development, you can discuss with your partners what this communication should look like, even when times are tough. That way you have a plan for dealing with difficult issues when they come up.
- Develop a decision matrix: You and your partners aren’t going to agree all the time. When there are differences, you have to know how to come to a decision. By crafting a decision matrix, you give yourself and your partners a neutral methodology through which you can reach a decision. This can reduce conflict when there’s a lack of consensus on important decisions.
- Reduce everything to writing: This sound obvious, but many partners think that they’re close enough to one another to take each other at their word. But this is a dangerous approach, as memories can fade and spoken statements can be difficult to prove if you end up in business litigation. So, make sure you put everything in writing so that you and your partners can refer back to your agreements when needed.
Don’t let a partnership dispute ruin your business and your future
A partnership dispute can spell all sorts of trouble for you and your business. That’s why you want to avoid them as much as possible. Through proper planning and the implementation of strong legal strategies, you can shield yourself from many of the risks you face. But, if you end up in the middle of a partnership dispute despite your best efforts to avoid them, then you’ll want to be armed with strong legal arguments to protect your interests.
