Business partnerships are common among entrepreneurs wanting to start a business. Business partnerships are not the same as those who will invest and share in profits. A business partnership means that the partners are equally responsible and involved in the business. While having a business partner can be beneficial, it should be carefully considered because statistics show that 70% of business partnerships dissolve and, in many cases, ultimately cause businesses to collapse in the wake of the partnership failure. Here are seven business partnership problems and how to avoid them.
Partnerships with Friends or Family is Risky
While some family-owned and operated businesses succeed, others may cause rifts within the family if the partnership doesn’t work out. These rifts are also true of those partnerships started with friends. There can be too many differences to overcome and end the relationship if things don’t work out. Partnering up with friends and family can be a great reward or cause devastation, so if you contemplate a partnership with a friend or family member, you need to try to be as sure as possible that you can trust the other person.
Unequal Commitment
If you are determined to have a partner, you need to make sure the other person will be very committed to the business and its operations. If you don’t carefully consider your partner and get into the business and find you can’t rely on your partner or are pulling more than your share of the business’s weight, this can be harder than if you didn’t have a partner. The best way to handle this is to either decline to partner with the person if you know their commitment level is questionable or have a legally binding contract drawn up by a business lawyer. This contract will protect you and your partner should either of you fail to hold up your end of the partnership.
Lack of Success
Building a business requires patience and perseverance. No matter how many people are involved in the business operation, there can be a lot of stress involved in running a business. Some businesses will succeed immediately, and others will take time to build, but it can cause stress and ultimately damage the partnership if your business is not succeeding. If one partner continues to work towards success, and the other partner is buckling under the stress, it can cause the partnership to fail. Partners will need to find strength in each other while they continue to work towards success. The key is for both partners never to give up and to work through the difficulties.
Different values
Many partnerships do not succeed because the partners are not aligned with the business’s values or goals. If you can’t agree before starting the business, that is a strong sign. You should not even enter into a partnership. However, there are situations where the partners are not aware of these differences until the business starts to evolve. As the differences arise, they must be worked through for the business to survive. If they can’t be resolved or agreements cannot be made, it may be a good choice to end the partnership.
Long-Term Goals
Long-term goals are important for any business, but they need to be agreed upon when working in a partnership. This set of goals makes it especially important for all partners to be involved in developing the business plan. The business plan will include short and long-term goals and many other aspects of the business that will help identify where partners agree and differ. Having long-term goals and a great business plan will help avoid the partnership’s failure or business.
Personality Clashes
Sharing risk and having a set of complementary skills are some of the great advantages of partnerships. Still, if the partners’ personalities do not fit together enough, the business may be in trouble. Disagreements between partners are expected, but if personalities clash and are not fitting together, this could result in the ending of the partnership, the relationship, and possibly the business. The key is to be sure you truly know and understand your partner before you ever enter into a partnership with them.
Risk Tolerance
When we are individuals, we may take more risks than if we are with a partner. However, you should never enter into a partnership in which your risk tolerance doesn’t compare. If one of you is willing to take more risks than the other, that can kill the business right from the start. Therefore, you must agree upon the business’s risk tolerance before entering into a partnership. If you can’t agree, it is probably best if you don’t partner up.
Conclusion
If you are going to start a business with a partner, there should be no surprises once the business as far as the partnership is concerned. However, some personality traits, ideas, or differences of opinion can cause a strain between partners, and you have to work through it. A business partnership is just like a marriage in that there will have to be mutual respect and compromise. Build trust and work together, and you can build a successful partnership and business.
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