Partner Disagreements, Ownership Disputes, Partner Wants Out

​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, some do not, and the likelihood of success is determined largely by how the parties handle issues that come up.

Just like other businesses, a lot of partnerships are under strain at any time and even working partnerships fray when faced with major challenges such as those of the coronavirus pandemic.

Here are some of the most common issues this type of relationship faces, and how you can make sure they do not become deal-breakers.

1.  Irreconcilable Differences

This is one of the most common reasons why marriages dissolve, with 42% of all divorces citing differences as their reason. In a business environment, this comes into play just as much, with partners finding they grow apart. Their goals and visions change, and they develop different dreams and financial targets.

Although it is a common reason, it’s also one of the easier ones to address. Communication can ease most tensions and smooth out friction between business owners.

2.  Fraud

Fraud in business comes in many shapes and sizes, but one thing is true across the board—it consists of dishonest or illegal activities carried out by an individual or a company that results in financial benefit to the perpetrator.

It often pretends to be a legitimate business practice, and can come in the form of overpayment, under-reporting, false charges, purchasing fraud, accounting fraud, phishing, re-shipping schemes, and other options. Someone always pays the price when fraud is committed, and often that person is the other partner.

3.  Appetite for Risk

Most companies, whatever their format, need to have a fairly well-defined appetite for risk. In a partnership, it’s important for all partners to be on the same page regarding the levels of risk they can handle.

If one or more partners have a high-risk appetite when it comes to investing, inventory levels, extending credit to customers, or borrowing finance for expansion activities, it might not go down well with other partners who have more conservative financial habits.

4.  Hiring and Firing

Partnerships need to be truly clear about hiring and firing responsibilities. This is important because more assertive partners will often do what they believe needs to be done in terms of hiring and firing staff. A less assertive partner will resent the decisions and actions taken because they were not consulted.

The end result is that often the partnership comes under strain because the partners are following opposing paths, which meet their individual needs but not those of the company.

5.  Spending

Money is a leading cause of stress in most types of relationships, and business partnerships are no exception. An attorney in San Diego, Robert J. Steinberger, says that 80% of businesses fail because either they are under-funded, or the partners can’t agree on how to manage the finances.

Whether you disagree on capitalization, new equipment purchasing, or earnings versus reinvesting in the business, the difference in opinion can sabotage the partners’ relationship.

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If you find you and your partner or partners are simply getting more frustrated and going nowhere, there is help available.

Our Whitepaper has eight strategies you can use to help bring all partners into harmony and alignment. Simply make your request and you’ll immediately receive The Whitepaper in your email.

WHITEPAPER: “HOW TO RESOLVE COMMON PARTNERSHIP ISSUES”

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6.  Productivity

It might seem strange to think a business partnership could become strained over productivity, but it is a fact that many people disagree on how productive a business or team should be.

If the partners have different productivity goals and cannot get onto the same page, it can be disruptive for the employees. Receiving conflicting instructions, targets and milestones from different directions is likely to result in confusion among the workforce at best, and “taking sides” with the partners at worst.

7.  Management Style

Most people have very individual management styles, and even when you are very familiar with someone’s management style, the lines in a partnership can become blurred. Situations that could arise include:

  • One partner is a stricter disciplinarian than another. S/he is more task-oriented, keeps their distance and gets things done. The other is relatable and laid-back and promotes a more relaxed company culture. In the best-case scenario, one partner provides tighter direction for the ship while the other keeps the staff happy.

This can lead to resentment on behalf of the person who might feel they need to manage the other partner as well as the staff.

  • Both partners could be “A-type” personalities, go-getters who like to steer things and clash over whose method is the best one. If both partners are highly competitive, it can leave employees wondering who they should be following.

This leads to confusion and duplication of tasks, unless it’s recognized, and the reporting lines are carefully structured to counter it.

Ideally, the partners’ management styles should complement each other, but not overlap too much. A good mix is when one is detail-oriented and the other a big-picture thinker, one is an expert in marketing and sales while the other prefers to stay in the background.

3.  Appetite for Risk

Most companies, whatever their format, need to have a fairly well-defined appetite for risk. In a partnership, it’s important for all partners to be on the same page regarding the levels of risk they can handle.

If one or more partners have a high-risk appetite when it comes to investing, inventory levels, extending credit to customers, or borrowing finance for expansion activities, it might not go down well with other partners who have more conservative financial habits.

4.  Hiring and Firing

Partnerships need to be truly clear about hiring and firing responsibilities. This is important because more assertive partners will often do what they believe needs to be done in terms of hiring and firing staff. A less assertive partner will resent the decisions and actions taken because they were not consulted.

The end result is that often the partnership comes under strain because the partners are following opposing paths, which meet their individual needs but not those of the company.

5.  Spending

Money is a leading cause of stress in most types of relationships, and business partnerships are no exception. An attorney in San Diego, Robert J. Steinberger, says that 80% of businesses fail because either they are under-funded, or the partners can’t agree on how to manage the finances.

Whether you disagree on capitalization, new equipment purchasing, or earnings versus reinvesting in the business, the difference in opinion can sabotage the partners’ relationship.

A Partnership Is A Business

​The biggest mistake anyone can make in a partnership is to assume that it can simply exist and that it will work without help.

Treat your partnership like the business operation it is and put checks and balances in place to give everyone a clear idea of their roles. That will ensure that it operates smoothly without the problems that often affect a regular marriage.

After all, what are you looking for – another spouse, or a business partner?

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