Partnerships: What Happens When Partners Disagree
When you are starting out a partnership, things are generally rosy; after all, you would not start a partnership if you are fighting like cats and dogs with your intended partner. However, somewhere down the line things may go wrong and you no longer have the harmonious relationship when you first started out in your business. What happens then? You cannot just walk away because you you can’t deal with your partner or you just feel like walking away and neither can your partner. How do you go about resolving your differences?
Take Time in Choosing your Business Partner
While all the excitement of starting out on a new venture might overrule your general attitude towards the individual you are partnering with, take the time to settle on a partner. Keep in mind that this is going to be a long term relationship that is legally binding, and in which you will be investing a lot of your time and financial resources. Think about whether this is the person you want to spend the next five or ten or more years building a business with. Picking the right partner will spare you a lot of heartache and disagreement in the future.
What Happens when you Disagree with your Partner?
If you disagree with your partner, you have to work at conflict resolution because this disagreement will most likely hurt your business. There are three alternatives to conflict resolution in a partnership and you can work through all three steps, depending on how severe the disagreement is between you and your partners.
Step 1: Reconciliation
If you and your partner have a small disagreement, then you can take the time to cool off before sitting down together to talk issues over in a calm and rational manner. You can even make references to your partnership agreement to determine what will be in the best interest of the business and your partnership. With reconciliation, you resolve the conflict internally without involving a third party.
Step 2: Arbitration
If you as partners cannot come to some form of agreement, you can involve a neutral third party such as a business coach to come and mediate. The perspective of the third party may clear any cobwebs and help you determine the way forward. Whatever is decided during the arbitration process has to be satisfactory to all partners and followed by. Another option would be to involve a lawyer to advice on the way forward. However, this is an expensive option and should be considered when everything else has failed.
Step 3: Dissolution
Dissolution is resorted to when the partners cannot come to any sort of agreement. The company is dissolved and the assets divided amongst the partners. It may also mean that one partner buys out the other.
Have a Partnership Agreement Drawn Up
No partnership is perfect as long as there are two or more people involved, there will be more than one point of view. As you set up your partnership, have a partnership agreement drawn up that will act as a guideline when you and your partners do not see eye to eye. This agreement should cover as wide as a spectrum as possible: expansion, expenses, taking on other partners, going public, selling the company, buying one partner out etc.
Be Careful when Starting your Partnership
So you see, choosing the right partner is as important as creating a business market plan. Once you’ve chosen your business partner, it only means that there is no backing out of the venture. Therefore, be very careful when you start a partnership with someone especially to a person that you don’t know well.