Running a business can be challenging. It requires strong focus and dedication, but the results can be incredibly rewarding. To balance some of the responsibilities, many entrepreneurs look for a business partner – someone to share in the challenges and help keep everything afloat.
Business partnerships are like any other relationship; they require commitment, understanding and trust. But sometimes, your partnership might come across an unexpected hurdle on the road toward success. How can you prevent a serious dispute from ruining all your hard work?
The best way to avoid business partnerships is to plan ahead. No one likes thinking about the worst-case scenario, but taking the time to prepare for future disagreements at the start will make sure you’re both ready if that situation ever occurs.
Here are a few steps you can take to prevent a dispute:
- Choose your business partner wisely. Business partners could be your spouse, your sibling, or your friend. Even if you get along with this person regularly, it doesn’t mean you’ll make a good match as business partners. Instead, you should find someone who shares the same work ethic, business values and goals that you do. By choosing the right partner, you will minimize the chances of disputes in the future.
- Write a partnership agreement. A partnership agreement is a key step in starting your business. The agreement allows you to outline all the details of your partnership, including respective contributions, authority and responsibilities, allocations of profits, management duties and much more. You can also include information about what to do in dispute situations. For example, you can decide to resolve disputes through mediation first before pursuing litigation.
- Get a personal attorney. Speaking of litigation, having a trusted personal attorney can help you in the case of a severe partnership dispute. They can also help in drafting the right partnership agreement.
- Discuss issues and worst-case scenarios. Addressing as many potential complications from the get-go can minimize the disputes in the future. You can outline each issue with a possible solution, allowing both you and your partner the chance to resolve your arguments on your own without taking legal action.
While you and your business partner might feel like the perfect match, you can’t expect your relationship will be smooth forever. Obstacles will occur, and it’s important that you protect yourself and your business from a dispute. With these precautions in place, you can hopefully resolve your issues and continue working together to lead your business toward success.