Partnerships are best cultivated with like-minded individuals. Finding someone with aligned growth strategies and management philosophies can equal an equation for success. Unfortunately, even successful business owners encounter disagreements. Disputes can not only be costly, but damage your hard-earned business. It is better to prevent them before they can ever erupt into costly litigation. Consider the following five ways to prevent partnership disputes.
1. Find a partner who balances your strengths
While you may get along better with a similar business partner, it can be beneficial to find someone who is unlike you. Great business partners complement each other’s skills. A business partner who thinks differently than you may offer strengths to your weaknesses. Keep in mind that strengths and weaknesses are different than values.
2. Talk about goals and values
Discuss your values and long-term goals for the business. If you and your co-founder cannot agree on these basic ideas, then trouble may lie in your future. Misaligned philosophies between business partners often lead to legal disputes in the future.
3. Hire an attorney before trouble starts
Business owners often make the costly mistake of hiring an attorney after they encounter their first dispute. At this point the damage has already been done. Hiring an attorney at the beginning can help you prevent lawsuits and the cost of litigation. An attorney specializing in business litigation can walk you through negotiations to resolve disputes without ever entering a courtroom.
4. Begin with professionally drafted agreements
Business partnerships would be built on trust alone in a perfect world. Whether your partnership is with a family member or a business savvy acquaintance, it is important to establish a foundation of legal agreements. Small business owners are adept at cutting costs wherever possible, but using an online template for an operating agreement should not be one of them. Legal agreements should be drafted by an attorney, including detailed job descriptions, explanation of pay and benefits, as well as protections.
5. Address the difficult questions
Talking about the worst-case scenarios may be uncomfortable, but they will offer a dose of reality for everyone involved. Talk to your potential business partner about the plan for disputes or failure. How will you handle differing marketing strategies? Where is the line for a lost cause? Create an enforceable set of rules for all worst-case scenarios.