Common reasons why partnership disputes occur
May 20, 2019
Are you thinking about going into business with someone else? It can be a good thing, but it will most likely not be without its problems. There are a number of reasons why Texas business owners may experience partnership disputes. Knowing what they are may be of benefit to you when choosing a partner.
An article released in late 2018 discusses six different things that contribute to partnerships failing. Some of these may seem fairly obvious, but others may be somewhat eye-opening.
Reason number one: Trust issues
Trust is key to make a partnership work. If you cannot trust your partner, how can you count on him or her to make the best decisions for your company? Wondering how you can figure out if a potential partner is trustworthy? You can always:
- Inquire about previous business relationships
- Look at his or her credit/tax history
- Inquire about any previous legal problems
If you feel you have found the right business partner for you, signing a detailed partnership agreement will protect you both should anything go awry.
Reason number two: Differing commitment levels
One advantage of having a partner is not having to do everything yourself. If you end up with a partner who is not putting a sufficient amount of effort into making your business a success, it is understandable that you would get frustrated at the situation.
Reason number three: Too close a relationship with one’s partner
Going into business with a spouse, other relative or a friend may seem like a good idea, but some people are unable to separate work and personal relationships. So, if something is not going well at work, it can damage the personal relationship as well.
Reason number four: Business failure
No one wants to think about the fact that their business may not be successful, but the simple truth is not every company will thrive. If you and your partner fail to find success in your venture right away or at all, the financial and psychological damages you both experience may be significant. Having a business plan in place and being willing to adjust it as needed can help you deal with business failure should it ever be an issue.
Reason number five: Values and goals do not align
Chances are you and your partner will have different ideas for how to run your company, but for the most part, your goals for the company should be similar, as should the values on which you wish to base your business. When your vision for the company differs from your partner’s, arguments are sure to ensue.
Reason number six: Difference in personalities
You and your partner do not need to be exactly the same, but having someone with a similar personality on your side will make running your business much easier.
Even if you do your due diligence and really look into a potential partner before agreeing to work with him or her, partnership disputes can happen. When they do, legal counsel can assist you as you seek resolution.