Conflicts between business partners are inevitable. Though most disagreements are usually resolved with discussion, there are some more serious disagreements that can threaten the partnership and potentially damage business. Often conflicts arise because partners haven’t had the opportunity to articulate clear objectives, directions, and roles and responsibilities before entering into a partnership. If conflicts are left unresolved, a partnership dispute can lead to the destruction of the business, families and friendships, and overall company productivity and morale.
It’s important to resolve the dispute and focus on what’s best for the individuals and the business. To resolve partnership conflicts, clear communication is key. First, find out what the root of the dispute is, perhaps by asking “What’s causing this conflict? How is the conflict affecting the business and employees?”
Issues in business such as not making enough money, having too much debt, or realizing the business model fails to give you your desired outcomes are situations that may require you to adapt and change your business plan. However, there are fundamental issues as well, such as lying, cheating, stealing, or other illegal activity. These issues are very serious and can be deal breakers for many partners, resulting in the termination of the partnership.
Common Partnership Disputes
There are several reasons for partnership disputes—from a partner not doing their job to misappropriating company assets to issue with addiction. Below is a list of common reasons for partnership conflicts:
- Someone is doing more work than another
- There’s an unfair workload
- Overstepping boundaries or authority
- Misappropriation of company assets
- Differing visions for the company
- Diverting assets that belong to the company
- Misappropriation of business opportunities that belong to the company
- Secretly competing with the company
- Differing opinions about an employee
- Using too much vacation time
- Someone doesn’t do their job
- Mistrust and disrespect
- Unhealthy addiction
- One of the partners isn’t liked by customers, clients, and/or employees
- The partners can’t compromise or agree on important decisions
Avoiding Partnership Disputes
It’s imperative you choose the right partner and have open communication. Communication is essential because you need to reassess how decisions are made and if your business goals and values align with your partner’s. During a business partnership, partners should regularly assess the risks and rewards related to the business.
Legally speaking, it’s wise to have a comprehensive partnership agreement in place. This agreement can help avoid misunderstanding by outlining each party’s professional expectations, objectives, and values. However, even with an agreement in place, partnership disputes still occur. Overall, effective communication is necessary to navigate and resolve business disputes. Partners should always work on developing their communication skills even before an altercation arises. Some ways to practice communication skills is to consider taking communications skills training or through coaching.
Resolving Business Partnership Disputes
But what if you can’t resolve your conflict? If this happens, partners need to determine whether or not one partner buys the other out or both sell out to a third party. Whatever decision you make, consider hiring a reliable commercial litigator to help with the dissolution of the partnership. An attorney can also help the partners agree on the next course of action.
One popular option when resolving business partnership disputes is to seek partnership mediation. Partnership mediation is when a third-party works with the partners and lawyers to surface all underlying issues. The third-party also helps structure an agreement that appeals to both sides, address all partners’ emotions, and facilitates constructive communication. Third-party members also identify solutions that meet all parties’ interests, as well as the business’ and the partnerships’, for future success. The third-party helps the partners to develop the skills needed to avoid or address future disputes. Partnership mediation is a voluntary process and is considered an efficient and effective approach for dispute resolution that’s quicker and cheaper than litigation matters in the courtroom.