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What are the leading causes of business partnership disputes?

On Behalf of | Mar 21, 2023 | Small Business

A business partnership involves two or more people cooperating to start or improve an organization. They generally share financial responsibility and managerial duties and will mutually benefit from the organization’s success.

Unfortunately, the very partnership established to help develop a business can prove a hindrance to its long-term success. Partnership disputes can lead to a cold war at the office that makes everyone uncomfortable and affects employee morale.

Learning about the most common sources of partnership disputes can help those who are hoping to avoid such complications in their future business relationships.

Misalignment of values or priorities

It is crucial for business partners to communicate about their short-term and long-term plans for the business. Although success may be the general goal, both partners may define success differently. Differences in goals and values can do major damage to a partnership.

One may want to create a thriving business that they pass on to their children. The other may hope to sell the organization to an investor later. Both partners need to talk about their goals for the organization and also what they intend to contribute. Clarifying such expectations will benefit partners and the organization that they start.

Negligence, laziness or misconduct

Even when partners make an effort to talk about what their job responsibilities will be and how they help to grow the company, complacency could still set in once the company becomes solvent. One partner may end up doing far more work than the other or cleaning up after the other’s messes.

Including clauses in a partnership contract that discuss drops in performance or mistakes that affect business finances can help prevent resentment from damaging a partnership or incompetence from damaging business operations.

A lack of an exit strategy

Sometimes, it will be one partner’s unexpected desire to move on from the partnership that leads to a messy dispute. Even if the initial intention is to remain with the company for five to 10 years, changes in their health and marital status might force them to reevaluate those goals.

Oftentimes, it is a lack of shared values or priorities that largely contribute to the root cause of a partnership dispute. Learning about and avoiding common sources of business partner disputes may help to protect entrepreneurs and those heavily invested in the sustainability of a business.