Business Partnership Problems: Proven Ways to Avoid 5 Pitfalls 

While partnerships can sometimes be the missing link to grow and scale a company, it’s natural for business partnership problems to arise.

Just like a personal relationship with a family member or spouse, business relationships can get pretty complicated.

My goal with this post is to equip you with everything you need to know about how to steer clear of the common business partner pitfalls, resolving disputes, and dealing with controlling partners.

What are the problems in partnership?

When two or more people enter into a business partnership there are certain issues that can cause tension and threaten the success of the relationship.

These issues include everything from different management styles, to differing opinions on strategy, to money and budget issues.

Let’s unpack some common partnership issues:

1. Different goals and priorities

One of the biggest challenges that business owners face when entering into a partnership is alignment of goals and values. It’s crucial that both partners have a clear understanding of what they person hopes to achieve through the partnership, and that these goals line up.

When partners disagree on their long term vision, this can lead to a lot of headaches down the line (i.e. if one partner is focused on rapid growth while the other partners want to play it safe).

2. Uneven workload between business partners

If partners have an unequal commitment to the business, this can lead to one partner feeling overburdened while the other is not pulling their weight.

If one partner puts more effort or financial risk into the venture than the other partner, resentment can develop among both parties which can ultimately lead to a breakdown in trust.

3. Lack of communication

Similar to any other team dynamic, the most common reason for business partnerships failing is lack of communication.

When partners don’t communicate effectively or regularly about their goals and expectations for the partnership, it’s easy for disagreements to arise.

4. Lack of clear expectations

One of the biggest issues business partners have is not having a clear set of expectations and goals for all parties involved. It’s critical that each partner have a mutual understanding of the roles and responsibilities, what’s expected from each person and how decisions will be made.

If you don’t have a written agreement up front to define these things, you’re opening yourself up to misunderstandings and discontent.

5. Lack of trust

Trust is vital in any partnership, and partners who don’t trust one another will find it difficult to work together effectively. Business owners need to be transparent with their partners and build a foundation of trust and mutual respect through clear communication and open dialogue.

6. Power struggles

As the business grows, partners may begin to jostle for control and decision-making power, which can send any business into a tailspin.

Two or more partners should agree on a plan for decision making that allocates responsibility and power evenly.

Behaviors that will destroy a business partnership

Beyond what we just covered above, there are certain behaviors that will actively destroy a business partnership and are a recipe for disaster.

• Lying or being dishonest: trust is the foundation of any partnership, and if one partner is caught lying or being dishonest, it can be difficult or impossible to rebuild that trust.
• Being controlling or micromanaging: partners who try to control every aspect of the business or who micromanage their partners can create a toxic and unhealthy environment.
• Being passive-aggressive: passive-aggressive behavior, such as withholding information or not following through on commitments can be a deal-breaker.
• Making unilateral decisions without consulting the other partners: partners need to have a plan for making decisions and should always consult with their partners before taking any major actions.
• Being unwilling to compromise: partners who are unwilling to compromise or who constantly try to get their way can make it impossible for the partnership to function.
• Substance abuse: crippling personal habits can lead to poor decision-making and an inability to focus, not to mention cripple a business.

What can business owners do to avoid these pitfalls?

By taking steps to avoid these common pitfalls, business owners can ensure that their partnerships remain strong and successful for years to come.

1. Don’t jump in too fast

This is by far the most common pitfall I see people make – leaping into a partnership way too quickly without assessing if it truly makes sense.

The only reason to have a partner is because they have something you lack – think about what each person brings to the table in terms of knowledge, money, or time. If you already have all of these elements, a partnership is likely not worth it.

A simple rule of thumb: if both partners have the same skills and knowledge base, they should not be in a business together.

Remember that in many cases, it’s better to simply pay someone for their services instead of giving away equity. As an example, many solid operators can be hired for significantly less and likely not require equity.

Equity is the most expensive thing you give up in a relationship and should only be given to someone who will drive growth in the long-term. Make sure to consider the long-term implications and whether or not equity is truly necessary.

2. Establish clear goals at the outset

Before entering into any partnership, both parties should have a thorough understanding of each other’s goals and expectations for the venture.

Are you both potential partners aligned on a big picture vision, values, and interests? Make sure you’re both on the same page and have a shared understanding of what you hope to achieve.

You want to work with someone you’re proud of, not just able to tolerate, so find a partner with complementary skills and a shared vision.

3. Put together an equitable written agreement

Make sure your agreements are clear and well-documented so that everything is fair and everyone knows what to expect.

If you don’t have a partnership agreement, you are taking a massive gamble. Relationships between partners often fail because of unmet or unspoken expectations.

Be willing to have a hard conversation about this up front – ideally everything goes smoothly and you never have to use it, but make sure you have a contract that leaves no room for interpretation.

Partners should agree on a plan for how decisions will be made to ensure that everyone is comfortable with the process and that power is distributed evenly.

4. Build trust and communicate regularly

Trust is essential in any partnership, and partners should take steps to build trust through open and honest communication.

Partners should remain in regular communication with each other regarding the progress and direction of the business, as well as any potential problems or issues that may arise. This will help ensure that everyone is on the same page and working toward the same goals.

Partners should treat each other with respect and listen to each other’s ideas, even if they don’t always agree on the best course of action.

How to resolve partnership disputes

If you’re experiencing conflicts or disagreements with your business partner, there are a few things you can do to try to resolve the issue:

• Allow time to cool off: I recommend giving everyone time to cool off before discussing the issue at hand to avoid emotions getting heated.
• Communicate: clear, open communication is key to resolving any dispute. Make sure you’re communicating with your partner about what’s bothering you and why. Try using active listening techniques such as repeating back what your partner has said so they know you understand them fully before responding yourself;
• Seek outside help: If you’re unable to resolve the issue on your own, think about enlisting the help of a mediator or a business coach who can help you work through the problem. The key is that this is an impartial third party who can help look at things objectively.
• Be willing to compromise: Remember that in any partnership, both parties need to be willing to compromise in order to make the relationship work. Focus on finding solutions rather than assigning blame.

How to deal with a controlling business partner

If you’re dealing with a controlling business partner, there are a few things you can do to try to address the issue:

• Be transparent: Talk to your partner about how their behavior is affecting you and the business. Make sure they understand your perspective and are clear on roles and responsibilities within the company.
• Set ground rules on decision making: Establish a set of guidelines for how decisions are made within the partnership, so that both partners have an equal say in major business decisions.
• Set up performance reviews: this will ensure both parties are held accountable for their actions within the company which should help reduce any feelings of control from either side. 
• Make boundaries clear: Make sure each partner has their own clearly defined role and responsibilities to prevent one partner from controlling or micromanaging the other. Make it clear what you will and will not tolerate in terms of your partner’s behavior.
• Seek outside help: If your partner is unwilling to change their behavior, consider seeking the help of a mediator or a business coach who can help you navigate the situation.

How to force a partner out of business

It can be extremely tough to deal with a partner who’s longer committed to the business or even worse, sabotaging the company.

Remember that forcing a partner out of business is a last resort and should only be considered after all other options have been exhausted.

A couple pieces of advice:

1. Before taking any rash action, I’d recommend talking through your concerns with your partner and trying to find common ground on how to move forward. The ideal scenario is to try and up with an amicable solution before taking any drastic action.  
2. Review any contracts or partnership agreement signed between individual partners – check whether your business partners have broken any terms which could give grounds for forcing them out.

What that said, there are a few things you can do to try to force a partner out of the business:

• Buyout: One option is to offer to buy out your partner’s share of the business. This can be a difficult and expensive process, but it can be a good way to remove a partner who is no longer committed to the business. If you’re interested in a deeper dive, I’ve written a detailed post on buying out a business partner.
• Mediation: Another option is to try to mediate a resolution with the help of a third party. A mediator can help you and your partner come to a mutually beneficial agreement.
• Legal action: In some cases, it may be necessary to take legal action to remove a partner from the business. This can include filing a lawsuit or seeking a court-ordered dissolution of the partnership. Depending on the severity of the situation this may be necessary in order for you to gain full control over the company.

Make sure you consult with a lawyer to understand the legal implication and actions to take for your specific situation.

Conclusion

Business partnerships can be incredibly rewarding and have many advantages, but they can also be filled with conflict and personality clashes. While it’s impossible to avoid all disagreements, knowing how to manage and resolve them is crucial.

Similar to personal relationships, business partnerships require dedication, understanding and compromise in order to survive. By understanding common problems that arise in many partnerships, and by being aware of the behaviors that can destroy a partnership, you can be better prepared to navigate the challenges that may come your way. 

When differences arise, it’s important to remember that the best way to handle them is through open communication, understanding and respect.

I hope you found this post helpful – if you have any other ideas for working through partnership issues I’d love to hear from you in the comments.