When Playing Nice Just Doesn’t Work Anymore: 4 Common Causes of Partnership Disputes

Starting a business is an exciting experience, and doing it with a partner can be a great way to boost your chances of success. When things are just starting out, everything may go relatively smooth. Over time, however, conflict is almost inevitable. Companies that learn how to properly handle disputes are the ones that have the best chance at success, so take some time to learn about four common causes of disputes between business partners, and how they can be resolved.

Poorly Defined Responsibilities

When starting a business, it is important to ensure each partner’s area of responsibility is clearly defined. Without this delineation, it is very common for each partner to focus on similar things, which results in overlapping work being done in some areas, and other work being neglected. Over time, this will lead to conflict on who should be doing what, which is why it is so important to establish in writing the main responsibilities of all the partners.

Inappropriate Use of Business Funds

Business owners often see company assets as available for their own personal use. If one partner pulls out money, even a small amount of money, for a personal need (even with the intent to repay the money) it will almost certainly cause conflict. Even when the partners can avoid a fight over this (which is unlikely) it is important to know that this is often illegal and can result in issues for the business as a whole.

Disagreements on the Goals of the Company

Partners need to make sure they have the same thing in mind when it comes to the future of the business. As early as possible, the partners should discuss what they have in mind regarding goals for the company. In addition to starting off on the same page in regards to goals, having a regularly scheduled meeting to stay in sync is also critical.

Making Business Decisions Independently

When running a business, decisions have to be made all the time. Some of them are just part of the day-to-day experience, but others are important and should be made by partners together. If one partner starts making important decisions for the business on their own, it will lead to trouble very quickly. To the extent possible, make sure each partner knows when they should be consulting with the other.

Involving a Neutral Third Party

One of the best ways to avoid conflict, and deal with it when it occurs, is by using a neutral third party to help get through issues. Many companies will consult with an attorney who can not only give good advice, but also base that advice on existing legal agreements (such as a partnership agreement) so that all the information is available. Contact APH Law to see how we can help you avoid, or get through, business-related conflicts.

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Written by APH Law PLLC

APH Law PLLC

When we founded APH Law PLLC in 2010, we did so out of a desire to connect business owners with more and better opportunities. No matter what industry you’re operating in, creating a strong foundation, preparing for the future, and protecting against challenges are key to long-term success. It is this kind of support that we take tremendous pride in helping businesses.