Business partnerships can be a wonderful way for a business to arrange quick capital and skills, especially for small businesses and startups. It can help you get the right resources without actually having to hire someone. But partnerships are not all good. The chances of conflicts and friction get higher when two or more people decide to run a business together.
There are many reasons why more than half of all business partnerships don’t survive. It is usually the matter of ego, money, duties, authority, stress, expenses or something else. It is crucial for partners to come up with a strategy or think of a solution to avoid such business conflicts in the future. Here are a few things you can do and not do to ensure a smooth running of business partnership.
Sharing of Expenses:
Instead of sharing your own capital in the business, you must try to form an associative arrangement where expenses are shared mutually by all the partners of the business. It is wise for all partners to have shared in the expenses rather than just in profits.
Forming a Written Agreement:
Although it is very natural for business partnerships to be bound with some kind of written agreement to ensure the solidarity of the business, many businesspersons still consider it unnecessary as they think they know their partners and can completely trust them. A partnership agreement can help you save your business and personal relationship in case of a conflict and it keeps different partners of the business in line. Make sure to include all the important things in your business partnership agreement.
Know Your Partner and His Goals:
No matter for how long you know the person, you both must have the same goals in order for the partnership to succeed. If your business partner wishes to split up after a few years or months to start up his own business or to do something else, it is wiser to look for someone else to partner with.
Don’t Partner with Someone When You Can’t Afford to Hire:
It seems like the best idea to partner with someone when you can’t afford to hire them at the time, but it really isn’t. You may have partnered with them then just because you needed them but later on, you cannot fire them even if you want to since you are obliged by the partnership agreement.
Discussion about the Future of the Business:
It is easier for partners to be optimistic in the beginning about the success of their business but they may not feel the same as challenges begin to appear. This is why it is crucial for partners to discuss the future of the business in the very beginning, about how and what ways to follow to deal with such future challenges.
Don’t be Afraid to Confront:
When you know that your partner is wrong or you can input better ideas in a certain decision, you must not hesitate to confront your partner. It shows that you feel the same responsibility towards the business, and you both are equally invested in making the right decision for the sake of the business.
Have an Exit Strategy:
An exit agreement is necessary to give you and your business partner the freedom to walk out of the partnership in the case when your business goals are no longer the same. This may at least save your relationship with the person, if not the partnership.
Partnerships may have the potential to take your business to the next level, but it isn’t recommended for every case. Make sure to consult an experienced business lawyer to avoid making a mistake in the business partnership.