For many business owners, partnerships are a great way to run the business. Operating a business with partners means you won’t have to make all the decisions independently. It means you will have someone there with you to help you carry the burden and share your ideas with. That can be a great thing when it works.
Unfortunately, many business partnerships fail. Although they fail for various reasons, there are some main factors that contribute to a business partnership breakup. Here are three reasons business partners break up and steps you can take to prevent it from happening to you.
Unequal contributions
All partnerships will go through periods where one person contributes—their time, money, energy, or other resources—more than others in the team. That’s normal. When it happens over a prolonged period of time or becomes a pattern, resentment can start to set in, and the partners can start to feel taken for granted.
In some cases, an inconsistency in contributions is natural. For example, if one of the partners has more time or money to invest. However, these situations require a conversation to ensure that the inequality is addressed and made up for in other areas. If one person has more time to contribute, is the other making it up by contributing more money? If one partner is in a stressful period—maybe they need to take a step back for a few months due to personal issues—can they pick up the slack later so that the other partner can take some time off?
Make sure this discussion involves measurable amounts. You can’t measure “worked extra,” but you can measure “work an extra five hours a week for four months.”
Unequal contributions should be addressed and managed, but all partners need to talk through the situation and develop a realistic and reasonable plan for making sure the disparity doesn’t become an insurmountable problem.
Not engaging help
Partnerships run into trouble when the partners involved think they can handle every issue that comes their way, even if it is outside their area of expertise. It doesn’t matter how many people are in the partnership, and if none of them are good with numbers, neither should be doing the accounting.
When people take on too many activities outside of their expertise, problems can start to arise. Mistakes are made, and people begin to place blame. Relationships can start to sour.
Share with your partners your areas of expertise and the activities you aren’t comfortable doing. Any tasks that no one has experience in should be given to a professional so that you can focus on the areas you’re good at and comfortable in.
Differing visions
Business partners should have a shared vision for the company to ensure they’re all working towards the same goals. It’s normal for partners to have slightly different views on achieving those goals, but overall the vision should be aligned.
Problems can take hold when partners have profoundly different ideas for the business and how to meet their goals.
Having a shared vision is an important step. To do so, make sure your company has a written formal strategic plan. Work with your partners to review and document the plan annually. Ensure everyone remains committed to the same vision and promptly address any shifts in perspective that may have occurred.
If you’re about to start a partnership, discuss with your business partners why they want to have a business, their vision for the company, and their long-term goals. Make sure everyone is at least somewhat on the same page.
Final thoughts
Having business partnerships can be incredibly rewarding, but they also have the potential for issues. Open communication about your skill sets, your ability to contribute, and your vision will help your partnership stay on track and prevent a breakup. Get in touch with us today and Join the Conversation… to discuss what other issues should be considered.