A business partnership is like a marriage – a honeymoon in the beginning, followed by a gradual adjustment to being part of a couple. Some partnerships work, while others do not, and the likelihood of success is determined largely by how the parties handle issues that come up.
Just like other types of businesses, a lot of partnerships are under strain at the present time, thanks to the coronavirus pandemic. Here are some of the most common issues and how you can make sure they don’t become deal-breakers.
Irreconcilable Differences
This is one of the most common reasons why marriages dissolve, with 42 percent of all divorces citing differences as their reason. In a business environment, this comes into play just as often, with partners finding they grow apart. Goals and visions change, and they develop different dreams and financial targets.
How to resolve this: Communication can ease most tensions and smooth out the friction between business owners. Schedule a time to talk undisturbed and avoid getting into arguments during times of crisis or when both partners are angry.
Roles and Responsibilities
Partnerships need to be truly clear about each person’s roles and responsibilities. Often, more assertive partners will do what they believe needs to be done, for example when hiring and firing staff.
A less assertive partner will resent the decisions and actions taken because they were not consulted. The result is that often the partnership comes under strain because the individuals follow opposing paths that meet their individual needs, but not those of the company.
How to resolve this: It’s best to avoid problems in the first place by identifying each partner’s strengths and weaknesses and having an upfront discussion of both parties’ long-term goals. It’s never too late, however, to incorporate a clear outline of each partner’s role and responsibilities into a watertight partnership agreement. [quotesright]Practice respect for each other’s opinions (even if you disagree) to ensure nobody feels unheard in the relationship. [/quotesright]
Financial Operations
Money is a leading cause of stress in most types of relationships, and 80 percent of business failures are due to being underfunded or because the partners can’t agree on how to manage the finances. In a partnership, it’s important for all partners to be on the same page regarding investing, inventory levels, extending credit to customers, and borrowing to fund expansion activities.
If one partner has more access to financial control than the other, problems are almost certain to arise.
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An Outsider Can Help
Emotions, history, animosity... even family can complicate working things out on your own. Often, having a neutral third party working with the partners helps smooth out and deconflict situations so real progress is made. We do it all the time as we help our clients identify their problems, discuss and resolve them.
Want to explore further? Questions? – Get in touch and let's set up a time to talk. Brian Tracy USA: 877.433.6225 Email Me
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How to resolve this: It might seem like overkill to have two signatories approve all expenditures, but it’s harder for one partner to commit fraud or overspend if everything is reviewed twice. It’s also less challenging to initiate financial oversight of a transparent operation than one that isn’t.
Management Style
Most people have very individual management styles, and even when you’re very familiar with someone’s management style, the lines in a partnership can become blurred. If both partners are highly competitive, it can leave employees wondering who they should be following, leading to confusion and duplication of tasks.
How to resolve this: Partners’ management styles should complement each other, without overlapping too much. Ideally, partners need to balance both the work and each other’s strengths and weaknesses, while maintaining a united vision.
Commitment Levels
Most entrepreneurs look for partners with skills, experience and commitment levels equal to their own. It’s essential for both partners to be completely transparent about what they expect each other to put in and what they expect to get out of the relationship.
How to resolve this: Figure out what you want for yourself and the business. Call a meeting with your partner and make it clear what you need. Layout the actions you’re willing to take to achieve the solutions and specify one or two counteractions you’d like your partner to take. [quotesright]Confirm the decisions in writing and develop a plan with timelines for putting it into practice.[/quotesright]
Key Takeaway
[quotes]Building a relationship with a business partner requires just as much work as any marriage.[/quotes] By being aware of some of the challenges you will likely face you can be prepared. Treat your partnership like the business operation it is. Put checks and balances in place to give everyone a clear idea of their roles and you’ll reap the benefits over the long term.
Resources:
https://www.huffpost.com/entry/10-most-common-reasons-people-divorce_b_8086312
https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/business-fraud
http://leadershipconsulting.com/partnership-fail-steps-prevent-failure/
https://www.entrepreneur.com/article/242513
https://www.healthline.com/health/what-is-a-type-a-personality
https://www.businessknowhow.com/startup/partnershipissues.htm
https://guides.wsj.com/small-business/starting-a-business/how-to-start-a-business-with-a-partner/
