In an ideal business world, a strong partnership would lead to success and happiness. While dreaming up your business, you probably didn’t give much thought about how to deal with a difficult business partner. If you have a bad business partner, it can affect all areas of the business. In fact, a recent Forbes article described working with others as a business risk.
What makes a good business partner?
A business partnership is a relationship, and like all relationships, you have to choose your partner wisely. Sometimes all it takes is a good idea to come together. In the long run, though, a healthy business partnership will require much more than that.
You can often spot the signs of a partnership gone bad by examining what makes a good partner. If some of these critical elements are missing, it might be time to take the first intervention steps.
1. Trust. Your financial health and livelihood are on the line. If you can’t trust your business partner, you are taking a huge risk for your financial future.
2. Respect. You expect your partner to take your ideas and plans into consideration. If you aren’t willing to do the same, what is holding you back?
3. Mutual goals. An idea remains an idea without a business plan. It’s essential for you and your partner to have similar end goals in mind. Both of your ideas for a good business need to head in the same direction.
4. Communication. This element is a big one. Poor communication in a business partnership is a recipe for disaster. It’s one of the first improvement areas to examine if you’re wondering why your business partnership is not working.
Time to talk it out
In the business-building process, you can sometimes get caught up in the excitement. Creative juices are flowing, and you have the world of potential at your feet. It’s sometimes easy to set aside important conversations during the start-up process. This behavior could even continue during times of success.
Improving communication can also solve some issues. As your company grows, especially if it grows expeditiously, your role might become less clear. The same lack of clarity could also apply to your business partner. Your idea of the changing roles could vary from your partner’s, so it’s imperative to have a discussion. Lack of defining your responsibilities could lead to each of you feeling the other is crossing boundaries.
Another frequently debated topic between business partners is compensation. Partnership agreements are partially created for these purposes. Successful company owners must reevaluate the terms of these agreements over time.
Too often business owners side-step the discussion of personal compensation. By avoiding the topic, one partner can feel like the other is taking advantage. Setting clear and fair standards can help save the relationship, or can make it clear that it’s not working out.
Since communication is the first step toward resolution, what does that need to involve? Communication styles vary, but a general guideline can help you get started.
- Set up a meeting with ample time to prepare
- Come prepared with an outline or notes
- Talk it out with a blunt discussion if necessary
- Review your business plan together
- Remain respectful
- Allow enough time to process after the meeting
What to do if communication fails
If you have tried to communicate with your business partner and are still having serious problems, look ahead. What will you do if the issues are not fixable?
Take some time to review your partnership agreement. This is also a good time to get a third party involved. You could have an attorney review your arrangement in case the situation progresses. It could also just mean finding and hiring a business coach to help you resolve your problems. If these attempts are unsuccessful, the partnership problems might be unfixable.
Consider a breakup
Savvy individuals know that any failing relationship needs a backup plan and an exit strategy. Review any legal ramifications of dissolving the partnership with an attorney. Find out what your partner will need or demand and establish your ideal breakup scenario. Breaking your partnership should be the last resort. Sometimes it’s best for the company and you personally to remove the negativity and start again.
Business partnerships arise from great ideas and big plans. Whether your company is experiencing success or is losing money, a shaky business partnership can be costly. Sometimes the best way to see if your relationship has declined is to take a step back.
Consider what makes a good partner and see if these qualities apply to yours. If you no longer think they do, start communicating until you reach a new understanding. Failure to resolve the issues might mean a breakup is in your future.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.