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Business Partnership Problems: 11 Common Causes and How To Avoid Them
Most business owners know that partnerships can be a great way to maximize efficiency and increase profits. However, there are common pitfalls of business partnerships that can cause a range of problems. In this blog post, we will explore the various issues that can arise in partnerships, how to identify them and the steps you can take to resolve them. We will look at the various dynamics that can affect the success of a partnership, such as partner miscommunication, differences in goals and objectives, and inadequate system of checks and balances. We will also discuss the importance of having a solid partnership agreement in place, and the potential consequences that can occur when conflict is not addressed in a timely manner. Finally, we will provide practical tips on how to navigate through challenging times, allowing you to continue to work together in a constructive and successful manner.
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11 common business partnership problems
While some conflict is inevitable within a company, it’s helpful to understand the most common causes of business partnership issues so that you can spot potential hot spots and lessen the likelihood of them happening. Common areas where business partnership problems may occur include:
1. Breakdown in trust
There may be aspects of a business partnership that one partner is directly aware of while the other is not. Partners must trust that the information they receive from their partners is accurate, and that they will carry out their commitments when they say they will do so. The partners should work to rebuild trust as soon as possible because if it erodes, it will probably cause additional issues.
2. Company struggles
It’s normal for those involved in a business to feel more pressure when it doesn’t achieve its goals. It’s critical for business partners to find ways to release any tension brought on by corporate issues. This can help find solutions because it prevents those issues from transferring into interactions with a partner and enables objective decision-making to deal with any issues.
3. Different priorities
When one business partner wants to devote time or resources to a project or department that another partner feels is a low priority, they may find themselves in conflict over plans if their priorities are different. It’s crucial for couples in these circumstances to reach compromises that everyone can live with.
4. Financial inequity
It’s critical that each business partner feel treated fairly with regard to ownership of the company. For the sake of the company’s long-term success, the partners may need to settle a dispute if one partner feels they are getting an unfair share of the company’s profits or equity in comparison to the amount of funding they contributed to the business.
5. Investment levels
Even if shares in the business make up the difference, problems could arise if business partners don’t have the same level of financial investment in the company. If one partner put more money into the business and believes it is not growing as quickly as they would like, they may become frustrated. If they believe the less-invested partner is not as concerned, there may be disagreements. To address this kind of issue, it is typical for a partner with a larger investment to gain more control over or a larger share of the company’s profits.
6. Lack of boundaries
It’s crucial to keep work and personal matters separate when working with a partner. When one or more business partners cross the line between work and personal life—either by bringing personal issues to work or trying to intrude too much into another partner’s personal life—it can be problematic for the partnership. In a working relationship, respecting each other’s privacy limits lessens the likelihood of conflict.
7. Management style
If you and your business partner approach employee management differently as senior staff at a company, this could lead to conflicts. However, you can also use this to your advantage because different workers respond to various workplace stimuli, and even the same worker may respond better to one style in some situations than another. Having partners who can use a variety of styles enables you to provide each with the best leadership possible.
8. Personal habits
All partners must respect one another and work to find solutions if one or more partners’ behavior is upsetting to other partners. Personal conflicts may arise when one partner thinks the other is acting inappropriately or finds the other’s actions upsetting. Problematic personal behaviors can be eliminated by establishing company behavior policies.
9. Power imbalance
It’s critical for each partner in a business owned by two or more people to feel secure in their level of power. If the partners are formally on an equal footing with the company, then this is especially crucial. Business partners may disagree if staff gives more weight to one partner or if that partner has more decision-making authority. When there is an imbalance, it may be necessary to meet with the staff and make sure that each partner is treated with respect in order to fix the issue.
10. Role imbalance
When partners have different workload responsibilities, it could become problematic. A partner with more responsibilities within the company might feel as though they are being asked to do more than their fair share of work, while a partner with fewer responsibilities might feel as though they are being unfairly prevented from working there. Redistributing the workload can help to resolve a situation where one partner feels their workload is too much.
11. Value differences
A professional’s personal values can have an impact on the company’s values and how they make professional decisions. When business partners disagree on fundamental issues of personal ethics, it can be problematic for the partnership. One way to prevent value-driven issues is to discuss your core values with prospective partners before forming a partnership because people frequently hold values strongly. When a partnership experiences issues due to value differences, take into account how strongly each party feels about the situation and work toward a peaceful resolution.
Why might business partnership problems exist?
Individual preferences differing from one another frequently cause issues in business partnerships, which can result in disagreements about how a company should run. Although some relationships fail because the partners aren’t a good fit, most issues are temporary and can be resolved. For instance, partners may have different management philosophies but be able to come to an agreement by deciding who will oversee which portion of the staff and allowing the other partner to do so independently.
Tips for a healthy business partnership
Making your partnership as cooperative as you can when you run your business with one or more partners is crucial. You can use these procedures to help your business achieve its goals:
What are some common problems with partnerships?
- Different management styles. Different management styles don’t have to be a big problem.
- Personal habits. …
- Financial problems and equity. …
- Setting boundaries. …
- Commitment levels. …
- Disparities in skills and roles.
Why do partnerships in business fail?
Partnerships fail because: They don’t clearly articulate their goals and purposes beyond just being a means of making money As a result, people frequently enter partnerships for financial gain but leave due to a misalignment of values, careers, or life goals.
What are 4 disadvantages of a partnership?
- Liabilities. A partnership involves sharing losses in business and debts, even if they are incurred by the other partner, in addition to sharing profits and assets.
- Loss of Autonomy. …
- Emotional Issues. …
- Future Selling Complications. …
- Lack of Stability.
How do business partners deal with problems?
- Plan Ahead When Possible, and Stop Fights Before They Start.
- Don’t Rush to Judgment. …
- Have an “Active Listening” Session. …
- Have an “Active Listening” Session.
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Problems In Your Business Partnership? Here’s What to Do
See if you can still resolve things with your business partner properly..
Posted March 22, 2021 | Reviewed by Matt Huston
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When business partnerships form, positive feelings like trust and respect are high, and there’s a general agreement regarding roles and direction. However, you may later find that trust wanes. Maybe your partner seems to be focusing more on their own interests rather than what’s best for the business, or you find yourself simmering with frustration over feeling disrespected in large or small ways. Maybe you’re feeling anxious as you discover that you and your partner seem to have different visions of the company’s direction, your roles, or compensation.
You’ve thought about splitting up, but you don’t want to “cut and run” if this problem could be resolved with some frank discussions, coaching , or other ways of strengthening communication and realigning the partnership. On the other hand, you don’t just want to keep banging your head against the wall if you and your partner really do have incompatible working styles or long-term visions for the company.
Try this three-phase “stair-step” approach to solving partnership problems. Caveat: Every partnership is different. You need to do what’s best for you.
Phase 1: Talk Openly
Prepare for a productive talk by listing specific examples (i.e., things that make you feel disrespected, how you’d like to handle compensation or split responsibilities). Make a paper list rather than a mental list to increase organization and accountability.
Invite your partner to talk in a way that sets the stage for success. (“Sara, are you available to talk sometime this week? There are some things that I’d like to share with you and get your feedback on, so I want to find a time that works well for your schedule.”) If you’re concerned about your partner’s ability to converse without devolving into “mudslinging,” or even about your own ability to do so, consider offering to have a coach present.
At the meeting, start by thanking your partner for a meeting, then talk openly about your list. Try to agree on standards of how you will treat each other, how you will be compensated, or whatever the point of contention is. You may not reach an agreement at the first meeting, so feel free to conclude by saying that it feels good to “start the conversation” and suggest meeting again in the next few days once you’ve both had time to consider today’s talk.
Once you reach an agreement about issues, suggest meeting regularly (every week or every month) to build accountability and keep communication open.
Phase 2: Get Support
Talk privately to a business lawyer to learn about your potential exit options or legal leverage, and review your contract’s exit clauses. Hopefully, you’ll never have to use this information, but it’s still good to know the parameters just in case you discover you’re at an impasse. It’s like insurance: You hope you’ll never use it, but having it helps you feel secure. Sometimes learning about exits also motivates people to make things work.
See if anyone in your network has gone through a similar struggle and would be willing to share with you what helped, and what they wish they had done differently. Obviously, choose someone you trust and have them confirm they will keep things confidential.
Ask your partner if they feel the partnership is working, and share that you do not. Emphasize that you want to create a new dynamic that works for both of you (only say this if it is true — if it is not true, skip to Phase 3). Insist on a shared coach to help you two get on (and stay on!) the same page, or at least to help you understand if an agreement is possible.
Phase 3: Take Action
If you have genuinely invested your best effort but remain at an impasse and feel it’s time to dissolve the partnership:
Speak to a lawyer again before telling your partner. You reached this point because you and your partner were unable to get on the same page, so it doesn’t make sense to assume that this person will now be willing and able to share and prioritize your view of mutual best interests. Give yourself the benefit of knowledge and wisdom from a business lawyer who has seen similar situations. Their input may shape when and how you present your new view of the soon-to-be-former partnership.
Decide on your ideal breakup outcome. Write it down. Next, select which parts of it are “must haves,” “nice to haves” and “can live without” items. It behooves you to consider this in advance and have a reference point if negotiations get hectic.
Choose the best way to communicate your decision. This will be different for every partnership, but it’s a lot like having a “breakup conversation.” Many people choose restaurants because it prevents (or at least discourages) the person from becoming explosive or hysterical (if that’s a concern). Others prefer meeting at the office, but it can be difficult to have a productive conversation about splitting up in the very environment where much of the difficulty that engendered the split has occurred.
Consult your lawyer for the next steps after the conversation. Do this whether it seems necessary or not. If you draft a separation agreement, have the lawyer read it before you present it. Similarly, don’t sign an agreement without your lawyer’s input. Some people are afraid lawyers will make things expensive and ugly. This is true only if the people paying the lawyers allow that to happen. Not getting legal advice can also prove to be an expensive mistake. You can get a lawyer’s opinion and disregard it if it seems “over the top,” but you’ll likely sleep better knowing you’ve consulted an attorney to ensure you’re not overlooking anything important.
Remember: These are just ideas I have seen help others. Even if they serve merely as a jumping-off point to stimulate other ideas, consider it a success that you are starting to organize your thoughts. If you have questions or additional ideas, please feel free to share them with me!
Chloe Carmichael, Ph.D. , a licensed clinical psychologist, is the author of Nervous Energy: Harness the Power of Your Anxiety.
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Even the best of business partnerships go through rough times. But what if your partnership has issues you think can’t be resolved? Here are some of the most common problems business partnerships face and ideas for how to deal with them.
I’ve found there are lots of people in a long standing business partnership who are not satisfied with the status of the relationship. They may feel stuck, frustrated, angry…or all of these. They know they’ve been silent far too long, but just don’t know what to do.
What can cause such a change in a relationship that started out with high hopes and good feelings?
Here are some of the situations I see most often. Do any of these apply to your partnership?
One partner feels like he’s carrying the bulk of the workload.
This may have happened because there wasn’t an agreement about who would do what. Job roles, responsibilities and accountability have not been discussed.
Expectations are not being met.
Expectations may be quite different for each partner. When expectations aren’t met, it’s a set up for negative feelings. It’s important that each partner knows what to expect from the others.
Partner has lost interest in the business or changed thinking.
Over time new attractions and options will continue to present themselves to all partners. When a partner becomes disenchanted with how the partnership is going, she is more likely to lose interest over time.
Can’t talk to each other.
Communication is so critical to maintaining a viable partnership. When partners get so busy doing their own thing that they can’t find time to sit down with the other(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to talk about certain things.
It’s a wrong partnership.
Sometimes the partnership has been a bad match from the beginning, but it was maintained for a variety of reasons. When the primary reason for the partnership was based on personal needs more than on business needs, if those needs aren’t fulfilled, the partnership will flounder. Maybe one partner thinks and acts fast and the other wants to research things in great detail. These people may never be able to function well together. Basic behaviors and traits will not likely change even if the person tries. Are any of these your concern? How do you open the subject of improving the relationship for the good of the company? NOTE: Even if you think it may be a wrong partnership, it’s worth making the effort to see if it’s salvageable.
If you want things to change, it’s up to you to change them. Make the decision you’re going to break the status quo, but you’re going to do it strategically.
Be clear about what you want.
Start by thinking about what you want for yourself and the business. NOTE: Use the Partner Questionnaire to help you organize your thinking. You can ask your partner(s) to do the same and compare notes or you can determine what you think will work and present it to your partner for feedback.
Schedule time to talk business.
Once you have thought things through it’s time to schedule a time to talk business. Give your partner plenty of lead time and full disclosure about what the meeting is about. Let him get prepared for the meeting, but don’t let it be put off because he “doesn’t have time”.
Discuss actions you’re each willing to take.
Be prepared with actions you are willing to take. You can request or suggest actions from your partner, but leave the topic open for discussion and agreement.
Write a PLAN for agreed upon changes.
Once you reach agreement, set Goals for yourselves and the business. To keep things moving in the right direction it’s a good idea to schedule periodic meetings to iron out details. This is the perfect time to start the habit of regular planned communications.
Set a timeframe for evaluation.
Three months is a reasonable timeframe to see if the Plan is achieving the results you want. Schedule an actual time where you will sit down together to see what has been accomplished toward the Goals you set. If you see progress, you may want to give it another three months.
If your evaluation tells you there is no hope, it may be time to make that very difficult decision to end the relationship. If you can’t come to agreement or you’re clearly going in different directions, it’s probably time to part ways. Why waste any more time on a losing proposition?
Yes, it’s like breaking up a marriage. But sometimes it has to be. Rather than feeling defeated, congratulate yourself on gaining the freedom to move on to something better.
Marian Banker, MBA, Business Leadership Coach is President of Prime Strategies, http://primestrategies.com . Her mission is transforming business owners into business leaders. She applies a proven business success system that organizes thinking, directs actions and establishes a leader mindset. Marian frequently works with partners and family businesses.
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Like all human relationships, business partnerships have their ups and downs. When things are going well, everyone is happy, and business usually booms. When things are not going well, however, even little disagreements can blow up into major disputes and business will often suffer for it. What are formerly happy business partners to do when they find themselves in the unfortunate cycle of ongoing and seemingly unsolvable disputes with one another?
Several options for resolution are available:
1) Mediation. With the help of a neutral, third-party mediator, business partners who wish to remain in business together can work through communication difficulties and differences of opinion regarding how their business and relationship should work. An objective mediator can facilitate healthy communication and decision-making between business partners, to put them on the path to a stronger partnership. Mediation is often an inexpensive way to identify and overcome negative communication cycles, to define goals and responsibilities and to agree to a resolution that the parties have mutually participated in crafting.
2) Buy-Out . If business partners have concluded they truly can no longer work together, but nevertheless want the business itself to continue, it is possible for one or more of them to be bought out by their other partners. If a buy-sell agreement was executed when the partnership was first formed, the parties should follow the procedures set forth in that document. If no buy-sell agreement exists, the first step will often be to have a valuation of the company completed so the parties understand what their interests are worth. It will then be necessary to negotiate who will be bought out and the terms under which the buyout will occur. Involving legal counsel in the negotiation and execution of any such buy-out is critical.
3) Sell Out to New Owners. Sometimes it will become apparent that neither business partner wishes to remain in the business, even where the business is still a viable and going concern. In this situation, it may make sense to look for a buyer who will purchase all partners’ interests in the company. Buyers can be found among existing employees, competitors or through business brokers. Again, a current valuation of the company should be obtained and hiring legal counsel to help with the transaction is important.
4) Freeze-Out Merger. In situations where the business partnership interests are not equal, majority owners can “freeze-out” minority owners by conducting a merger with a newly created company owned by the majority owners. In this situation, the minority owners are forced out of ownership, but are paid fair market value for their interests. Freeze-out mergers are governed by statute and precedential court opinions. Obtaining the services of a business attorney who has experience conducting such transactions will be necessary.
5) Dissolution – Voluntary or Judicial. In some circumstances, it will become apparent that salvaging the business and the relationship is simply not feasible and dissolution of the corporate entity will be the preferred path. If the parties can agree to voluntarily dissolve the company, it may be as simple as filing the necessary paperwork with the State, paying off creditors, selling remaining assets and distributing any proceeds according to partnership interests. But sometimes even agreeing on dissolution is impossible and seeking help from the courts will be required. Statutory law allows for judicial dissolution of a company by filing a lawsuit. When judicial dissolution happens, the parties the parties lose control over the dissolution process and simply must abide by whatever the judge decides.
6) Bankruptcy. Not surprisingly, disputes between business partners often arise because of dire financial circumstances facing their company. When the liabilities of a company exceed its assets, it is insolvent. Instead of continuing to wallow in debt that will likely continue to increase, an insolvent business may find that filing for bankruptcy is the best option. In some situations, bankruptcy will allow the business to restructure its debt and continue to operate. In others, full liquidation of the business may be the only option. In either case, hiring a reputable and experienced bankruptcy attorney will be necessary to navigate the complexities of the bankruptcy code.
7) Litigation. Occasionally disputes between partners result from misconduct by one or more of them. Breaches of fiduciary duties, misappropriation of assets, fraud, and failure to satisfy obligations and responsibilities are just some of the scenarios that can result in lawsuits between business partners. Filing a legal cause of action against business partners who have violation their obligations to their other partners and/or the company can result in awards of financial damages to the injured parties. Experienced litigation counsel should be consulted to analyze potential claims and to file any such legal actions.
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Improving the management of complex business partnerships
Partnerships never go out of style. Companies regularly seek partners with complementary capabilities to gain access to new markets and channels, share intellectual property or infrastructure, or reduce risk. The more complex the business environment becomes—for instance, as new technologies emerge or as innovation cycles get faster—the more such relationships make sense. And the better companies get at managing individual relationships, the more likely it is that they will become “partners of choice” and able to build entire portfolios of practical and value-creating partnerships.
Of course, the perennial problems associated with managing business partnerships don’t go away either—particularly as companies increasingly strike relationships with partners in different sectors and geographies. The last time we polled executives on their perceived risks for strategic partnerships, 1 Observations collected in McKinsey’s 2015 survey of more than 1,250 executives. Sixty-eight percent said they expect their organizations to increase the number of joint ventures or large partnerships they participate in over the next five years. A separate, follow-up survey in 2018 showed that 73 percent of participants expect their companies to increase the number of large partnerships they engage in. the main ones were: partners’ disagreements on the central objectives for the relationship, poor communication practices among partners, poor governance processes, and, when market or other circumstances change, partners’ inability to identify and quickly make the changes needed for the relationship to succeed (exhibit).
In our work helping executive teams set up and navigate complex partnerships, we have witnessed firsthand how these problems crop up, and we have observed the different ways companies deal with them . The reality is: successful partnerships don’t just happen. Strong partners set a clear foundation for business relationships and nurture them. They emphasize accountability within and across partner companies, and they use metrics to gauge success. And they are willing to change things up if needed. Focusing on these priorities can help partnerships thrive and create more value than they would otherwise.
Establish a clear foundation
It seems obvious that partner companies would strive to find common ground from the start—particularly in the case of large joint ventures in which each side has a big financial stake, or in partnerships in which there are extreme differences in cultures, communications, and expectations.
Yet, in a rush to complete the deal, discussions about common goals often get overlooked. This is especially true in strategic alliances within an industry, where everyone assumes that because they are operating in the same sector they are already on the same page. By skipping this step, companies increase the stress and tension placed on the partnership and reduce the odds of its success. For instance, the day-to-day operators end up receiving confusing guidance or conflicting priorities from partner organizations.
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How can the partners combat it? The individuals expected to lead day-to-day operations of the partnership, whether business-unit executives or alliance managers, should be part of negotiations at the outset. This happens less often than you think because business-development teams and lawyers are typically charged with hammering out the terms of the deal—the objectives, scope, and governance structure—while the operations piece often gets sorted out after the fact.
Transparency during negotiations is the only way to ensure that everyone understands the partners’ goals (whether their primary focus is on improving operations or launching a new strategy) and that everyone is using the same measures of success. Even more important, transparency encourages trust and collaboration among partners, which is especially important when you consider the number of executives across the organizations who will likely rotate in and out of leadership roles during the life of the relationship.
Inevitably, points of tension will emerge. For instance, companies often disagree on financial flows or decision rights. But we have seen partners articulate such differences during the negotiation period, find agreement on priorities, and reset timelines and milestones. They defused much of the tension up front, so when new wrinkles—such as market shifts and changes in partners’ strategies—did emerge, the companies were more easily able to avoid costly setbacks and delays in the business activities they were pursuing together.
Nurture the relationship
Even business relationships that start off solidly can erode, given individual biases and common communication and collaboration issues. There are several measures partners can take to avoid these traps.
If executives in the partner organizations actively look for opportunities to understand one another, good collaboration and communication at the operations level are likely to follow. Given time and geographic constraints, it can be hard for them to do so, but as one energy-sector executive who has negotiated and managed dozens of partnerships noted, “It’s important to spend as much time as you can on their turf.” He says about 30 to 40 percent of partnership meetings are about business; the rest of the time is spent building friendships and trust.
Keep everyone in the loop
Skipping the step of keeping everyone informed can create unnecessary confusion and rework for partner organizations. That is what happened in the case of an industrial joint venture: the first partner in the joint venture included a key business-unit leader in all venture-related discussions. The second partner apprised a key business-unit leader about major developments, but this individual did not actually join the discussions until late in the joint-venture negotiation. At that point, as he learned more about the agreement, he flagged several issues, including inconsistencies in the partners’ access to vendors and related data. He immediately recognized these issues because they directly affected operations in his division. Because he hadn’t been included in early discussions, however, the partners wasted time designing an operating model for the joint venture that would likely not work for one of them. They had to go back to the drawing board.
Recognize each other’s capabilities, cultures, and motivations
Partners come together to take advantage of complementary geographies, corresponding sales and marketing strengths, or compatibilities in other functional areas. But it is important to understand which partner is best at what . This process must start before the deal is completed—but cannot stop at signing. In the case of one consumer-goods joint venture, for instance, the two partner organizations felt confident in their plan to combine the manufacturing strength of one company with the sales and marketing strengths of the other. During their discussions on how to handle financial reporting, however, it became clear that the partner with sales and marketing strengths had a spike in forecasting, budgeting, and reporting expertise. The product team for the first partner had originally expected to manage these finance tasks, but both partner teams ultimately agreed that the second partner should take them on. In this way, they were able to enhance the joint venture’s ongoing operations and ensure its viability.
Equally important is understanding each partner’s motivation behind the deal. This is a common point of focus during early negotiations; it should continue to be discussed as part of day-to-day operations—particularly if there are secondary motivators, such as access to suppliers or transfer of capabilities, that are important to each partner. Within one energy-sector partnership, for instance, the nonoperating partner was keen to understand how its local workforce would receive training over the course of the partnership. This company wanted to enhance the skills of the local workforce to create more opportunities for long-term employment in the region. The operating partner incorporated training and skill-evaluation metrics in the venture’s quarterly updates, thus improving the companies’ communication on the topic and explicitly acknowledging the importance of this point to its partner.
Invest in tools, processes, and personnel
Bringing different business cultures together can be challenging, given partners’ varying communication styles and expectations. The good news is that there are a range of tools—among them, financial models, key performance indicators, playbooks, and portfolio reviews—companies can use to help bridge any gaps. And not all these interventions are technology dependent. Some companies simply standardize the format of partnership meetings and agendas so that teams know what to expect. Others follow stringent reporting requirements.
Another good move is to convene an alliance-management team. This group tracks and reviews the partnership’s progress against defined metrics and helps to spot potential areas of concern—ideally with enough time to change course. Such teams take different forms. One pharmaceutical company with dozens of commercial and research partnerships has a nine-member alliance-management team charged mostly with monitoring and flagging potential issues for business-unit leaders, so it consists of primarily junior members and one senior leader who interacts directly with partners. An energy company with four large-scale joint ventures has taken a different approach: its alliance-management team comprises four people, but each is an experienced business leader who can serve as a resource for the respective joint-venture-leadership teams.
Sometimes partnerships need a structural shake-up—and not just as an act of last resort.
How companies structure these teams depends on concrete factors—the number and complexity of the partnerships, for instance—as well as intangibles like executive support for alliances and joint ventures and the experiences and capabilities of the individuals who would make up the alliance-management team.
Emphasize accountability and metrics
Good governance is the linchpin for successful partnerships; as such, it is critical that senior executives from the partner organizations remain involved in oversight of the partnership. At the very least, each partner should assign a senior line executive from the company to be “deal sponsor”—someone who can keep operations leaders and alliance managers focused on priorities, advocate for resources when needed, and generally create an environment in which everyone can act with more confidence and coordination.
Additionally, the partners must define “success” for their operations teams: What metrics will they use to determine whether they have hit their goals, and how will they track them? Some companies have built responsibility matrices; others have used detailed process maps or project stage gates to clarify expectations, timelines, and critical performance measures. When partnerships are initially formed, it is usually the business-development teams that are responsible for building the case for the deal and identifying the value that may be created for both sides. As the partnership evolves, the operations teams must take over this task, but they will need ongoing guidance from senior leaders in the partner organizations.
Build a dynamic partnership
Sometimes partnerships need a structural shake-up—and not just as an act of last resort. For instance, it might be less critical to revisit the structure of a partnership in which both sides are focused on joint commercialization of complementary products than it would be for a partnership focused on the joint development of a set of new technologies. But there are some basic rules of thumb for considering changes in partnership structure.
Partner organizations must acknowledge that the scope of the relationship is likely to shift over time. This will be the case whether the partners are in a single- or multiasset venture, expect that services will be shared, anticipate expansion, or have any geographic, regulatory, or structural complexities. Accepting the inevitable will encourage partners to plan more carefully at the outset. For example, during negotiations, the partners in a pharmaceutical partnership determined that they had different views on future demand for drugs in development. This wasn’t a deal breaker, however. Instead, the partners designated a formula by which financial flows would be evaluated at specific intervals to address any changes in expected performance. This allowed the partners to adjust the partnership based on changes in market demand or the emergence of new products. All changes could be incorporated fairly into the financial splits of the partnership.
Avoiding blind spots in your next joint venture
Partners should also consider the potential for restructuring during the negotiation process—ideally framing the potential endgame for the relationship. What market shifts might occur, how might that affect both sides’ interests and incentives, and what mechanisms would allow for orderly restructuring? When one oil and gas joint venture began struggling, the joint-venture leader realized he was being pulled in opposing directions by the two partner companies because of the companies’ conflicting incentives. “It made the alliance completely unstable,” he told us. He brought the partners back to the negotiation table to determine how to reconcile these conflicting incentives, restructure their agreement, and continue the relationship, thus avoiding deep resentment and frustration on both sides of the deal.
Such dialogues about the partnership’s future, while potentially stressful, should be conducted regularly—at least annually.
The implementation of these four principles requires some forethought and care. Every relationship comes with its own idiosyncrasies, after all, depending on industry, geography, previous experience, and strategy. Managing relationships outside of developed markets, for instance, can present additional challenges involving local cultures, integration norms, and regulatory complexities. Even in these emerging-market deals, however, the principles can serve as effective prerequisites for initiating discussions about how to change long-standing practices and mind-sets.
An emphasis on clarity, proactive management, accountability, and agility can not only extend the life span of a partnership or joint venture but also help companies build the capability to establish more of them—and, in the process, create outsize value and productivity in their organizations.
Ruth De Backer is a partner in McKinsey’s New York office, where Eileen Kelly Rinaudo is a senior expert.
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Solving Business Partner Problems: Strategies for Success
When you enter into a business partnership, you expect it to be a mutually beneficial relationship. After all, the very idea of a partnership is to combine resources and expertise to achieve common goals. But as with any relationship, problems can arise. Whether it's a disagreement over strategy, a difference in work styles, or simply a clash of personalities, unresolved issues with your partner can cause serious damage to your business.
Understanding Business Partner Problems
Running a business with a partner can be a great way to share the workload, bring in new ideas, and split the financial burden. However, problems with your business partner can manifest themselves in a variety of ways and can quickly turn a successful partnership into a nightmare. It's important to recognize and understand these issues before you can begin to address them.
One of the most common problems that arise with business partners is communication breakdowns. When partners aren't communicating effectively, misunderstandings can occur, leading to resentment and frustration. This can be especially problematic if one partner is making decisions without consulting the other.
Another common issue is misaligned priorities. If one partner is focused on expanding the business while the other is more concerned with cutting costs, conflicts can arise. It's important for partners to be on the same page when it comes to the direction of the business.
Different work styles can also cause problems. If one partner is more hands-on while the other prefers to delegate tasks, it can lead to tension and disagreements over who is responsible for what. Conflicting goals and objectives can also create problems, especially if partners have different ideas about what success looks like.
Identifying Common Issues
If you're experiencing any of these issues with your partner, it's essential to take action before the situation spins out of control. The sooner you address the problem, the more likely it is that you'll be able to find a workable solution.
Recognizing the Root Causes
Before you can begin to address the issue, it's important to identify the root cause. In many cases, the problem may be the result of a difference in personality or work style. Other times it may be due to a lack of communication or misaligned goals.
If the issue is related to personality differences, it's important to remember that everyone has their own way of doing things. By acknowledging and respecting these differences, partners can work together more effectively. If the issue is related to communication, it may be helpful to establish regular check-ins or meetings to ensure that both partners are on the same page. Misaligned goals can often be resolved through compromise and open discussion.
Whatever the root cause may be, it's essential that you take steps to address it. Ignoring the issue will only lead to further tension and potential damage to your business.
Assessing the Impact on Your Business
It's important to take a step back and analyze the impact that the issue is having on your business. How is it affecting your productivity, your bottom line, and your overall business goals? By understanding the impact of the problem, you'll be better equipped to find a solution that addresses the underlying issue.
For example, if communication breakdowns are causing delays in projects, it may be necessary to establish more regular check-ins or to use project management tools to ensure that everyone is on the same page. If misaligned goals are causing conflicts, it may be helpful to revisit and revise your business plan to ensure that everyone is working towards the same objectives.
Ultimately, addressing business partner problems requires open communication, a willingness to compromise, and a commitment to finding solutions that work for everyone. By taking the time to understand the root causes of the problem and assessing its impact on your business, you'll be better equipped to find a way forward that preserves your partnership and helps your business thrive.
Effective Communication Techniques
One of the most important skills in any business relationship is communication. Effective communication can help you avoid misunderstandings, resolve conflicts, and build stronger partnerships.
However, effective communication is not always easy to achieve. It requires active effort and a willingness to listen and understand the perspectives of others.
Active Listening Skills
Active listening is an essential component of effective communication. It involves focusing your attention on the speaker and making an effort to understand their perspective. By actively listening to your partner, you'll be better equipped to find common ground and resolve issues.
Active listening involves not only hearing the words that are being spoken, but also paying attention to nonverbal cues such as body language and tone of voice. It requires setting aside distractions and giving the speaker your full attention.
Effective active listening also involves asking clarifying questions and summarizing what the speaker has said to ensure that you have understood their perspective correctly.
Assertiveness and Diplomacy
Effective communication also involves being assertive while remaining diplomatic. It's important to express your needs and concerns clearly and firmly, while also being respectful of your partner's perspective.
Being assertive means standing up for yourself and your needs, but doing so in a way that is not aggressive or confrontational. It involves using "I" statements to express how you feel and what you need, rather than placing blame or attacking the other person.
Diplomacy involves being tactful and respectful in your communication, even when you disagree with the other person. It means avoiding language that is inflammatory or accusatory, and instead focusing on finding common ground and working together to find a solution.
Resolving Conflicts through Mediation
In some cases, the best way to resolve a conflict is with the help of a mediator. A mediator can help you and your partner find common ground and develop a workable solution. By involving a neutral third party, you may be able to resolve the issue more quickly and effectively.
Mediation involves sitting down with a trained mediator who will listen to both sides of the issue and help you find a solution that works for everyone involved. The mediator will not take sides or make decisions for you, but instead will facilitate the conversation and help you communicate effectively with each other.
Mediation can be especially useful when emotions are running high and communication has broken down. It can help you and your partner move past the conflict and focus on building a stronger relationship going forward.
Establishing Clear Expectations and Boundaries
Another way to avoid business partner problems is to establish clear expectations and boundaries from the outset. This can help prevent misunderstandings and ensure that all parties are on the same page.
Clear expectations and boundaries are essential for any successful business partnership . It is important to communicate openly and honestly with your partners to ensure that everyone is clear on what is expected of them. This can help prevent misunderstandings and ensure that everyone is working towards the same goals.
When establishing clear expectations, it is important to define the scope of the project or partnership. This can help prevent any confusion about what is expected and ensure that everyone is working towards the same goals. It is also important to establish timelines and deadlines for the project or partnership to ensure that everyone is working towards a common goal.
Defining Roles and Responsibilities
One of the most important aspects of establishing clear expectations is defining roles and responsibilities. This ensures that everyone knows what they're responsible for and can avoid stepping on each other's toes. It can also help prevent conflicts over who is responsible for what.
When defining roles and responsibilities, it is important to be clear and specific. This can help prevent any confusion or misunderstandings about who is responsible for what. It is also important to ensure that everyone is comfortable with their assigned roles and responsibilities.
Setting Performance Metrics
Another important aspect of setting expectations is establishing performance metrics. This helps ensure that everyone is working towards the same goals and can help you measure your progress over time. By setting measurable objectives, you'll be better equipped to evaluate your success and make adjustments as needed.
When setting performance metrics, it is important to be realistic and specific. This can help ensure that everyone is working towards achievable goals. It is also important to track progress regularly to ensure that you are on track to meet your goals.
Creating a Conflict Resolution Plan
Finally, it's important to have a plan in place for resolving conflicts when they arise. This can include a process for escalating issues to higher levels of authority or bringing in a mediator to help resolve the issue. By having a plan in place, you'll be better equipped to address problems head-on and prevent them from escalating out of control.
When creating a conflict resolution plan, it is important to be proactive and anticipate potential issues. This can help ensure that you are prepared to address any problems that arise. It is also important to communicate the conflict resolution plan to all parties involved to ensure that everyone is aware of the process.
In conclusion, establishing clear expectations and boundaries is essential for any successful business partnership. By defining roles and responsibilities, setting performance metrics, and creating a conflict resolution plan, you can help prevent misunderstandings and ensure that everyone is working towards the same goals.
Strengthening Your Business Partnership
Business partnerships can be a great way to achieve success, but they can also come with their fair share of challenges. From disagreements over strategy to conflicts over finances, there are many potential pitfalls that can derail even the most promising partnership. However, by taking proactive steps to strengthen your partnership, you can minimize these risks and build a more successful and sustainable business.
So, what are some of the best ways to strengthen your business partnership? Let's take a closer look.
Building Trust and Transparency
As mentioned earlier, trust is a critical component of any successful partnership. When partners trust each other, they are more likely to communicate openly, share ideas, and work together effectively. However, building trust can be easier said than done.
One way to build trust is to be transparent with your partner. This means sharing information about your business, your goals, and your concerns. By being open and honest, you'll show your partner that you value their input and are committed to working together towards a common goal.
Another way to build trust is to follow through on your commitments. If you say you're going to do something, make sure you do it. This will help establish a pattern of reliability and accountability that can further strengthen your partnership.
Fostering a Collaborative Environment
In addition to building trust, it's important to foster a collaborative environment within your partnership. This means working together towards common goals, sharing information, and pooling resources.
One way to foster collaboration is to regularly schedule meetings or check-ins with your partner. This can help ensure that you're both on the same page and working towards the same objectives. It can also provide an opportunity to brainstorm new ideas or discuss any challenges that may arise.
Another way to foster collaboration is to divide responsibilities based on each partner's strengths and expertise. By playing to each other's strengths, you can maximize your efficiency and productivity, while also minimizing the risk of conflicts or misunderstandings.
Celebrating Successes and Learning from Failures
Finally, it's important to celebrate your successes and learn from your failures. This can help you build a stronger, more resilient partnership that can weather any storm.
When you achieve a goal or milestone, take the time to acknowledge and celebrate it with your partner. This can help build a sense of camaraderie and shared accomplishment that can further strengthen your partnership.
Conversely, when you encounter a setback or failure, take the time to reflect on what went wrong and how you can avoid similar pitfalls in the future. By learning from your mistakes, you can build a more successful and sustainable partnership over the long term.
By following these tips and taking proactive steps to strengthen your partnership, you can minimize the risks and maximize the rewards of your business partnership. Remember, building a successful partnership takes time, effort, and commitment, but the payoff can be well worth it in the end.
Business partner problems can be difficult, but they don't have to be the end of the road. By understanding the common issues that arise, developing effective communication techniques, establishing clear expectations and boundaries, and strengthening your partnership, you'll be better equipped to handle any obstacle that comes your way.
Remember, every partnership is unique, and what works for one may not work for another. But by following these strategies and adapting them to your specific situation, you'll be well on your way to solving your business partner problems and achieving success.
How to fix business partner problems: a step-by-step guide.
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Business Partnership Problems: Proven Ways to Avoid 5 Pitfalls
While partnerships can sometimes be the missing link to grow and scale a company , it’s natural for business partnership problems to arise.
Just like a personal relationship with a family member or spouse, business relationships can get pretty complicated.
My goal with this post is to equip you with everything you need to know about how to steer clear of the common business partner pitfalls, resolving disputes, and dealing with controlling partners.
What are the problems in partnership?
When two or more people enter into a business partnership there are certain issues that can cause tension and threaten the success of the relationship.
These issues include everything from different management styles, to differing opinions on strategy, to money and budget issues.
Let’s unpack some common partnership issues:
1. Different goals and priorities
One of the biggest challenges that business owners face when entering into a partnership is alignment of goals and values. It’s crucial that both partners have a clear understanding of what they person hopes to achieve through the partnership, and that these goals line up.
When partners disagree on their long term vision, this can lead to a lot of headaches down the line (i.e. if one partner is focused on rapid growth while the other partners want to play it safe).
2. Uneven workload between business partners
If partners have an unequal commitment to the business, this can lead to one partner feeling overburdened while the other is not pulling their weight.
If one partner puts more effort or financial risk into the venture than the other partner, resentment can develop among both parties which can ultimately lead to a breakdown in trust.
3. Lack of communication
Similar to any other team dynamic , the most common reason for business partnerships failing is lack of communication.
When partners don’t communicate effectively or regularly about their goals and expectations for the partnership, it’s easy for disagreements to arise.
4. Lack of clear expectations
One of the biggest issues business partners have is not having a clear set of expectations and goals for all parties involved. It’s critical that each partner have a mutual understanding of the roles and responsibilities, what’s expected from each person and how decisions will be made.
If you don’t have a written agreement up front to define these things, you’re opening yourself up to misunderstandings and discontent.
5. Lack of trust
Trust is vital in any partnership, and partners who don’t trust one another will find it difficult to work together effectively. Business owners need to be transparent with their partners and build a foundation of trust and mutual respect through clear communication and open dialogue.
6. Power struggles
As the business grows, partners may begin to jostle for control and decision-making power, which can send any business into a tailspin.
Two or more partners should agree on a plan for decision making that allocates responsibility and power evenly.
Behaviors that will destroy a business partnership
Beyond what we just covered above, there are certain behaviors that will actively destroy a business partnership and are a recipe for disaster.
- Lying or being dishonest: trust is the foundation of any partnership, and if one partner is caught lying or being dishonest, it can be difficult or impossible to rebuild that trust.
- Being controlling or micromanaging: partners who try to control every aspect of the business or who micromanage their partners can create a toxic and unhealthy environment.
- Being passive-aggressive: passive-aggressive behavior, such as withholding information or not following through on commitments can be a deal-breaker.
- Making unilateral decisions without consulting the other partners: partners need to have a plan for making decisions and should always consult with their partners before taking any major actions.
- Being unwilling to compromise: partners who are unwilling to compromise or who constantly try to get their way can make it impossible for the partnership to function.
- Substance abuse: crippling personal habits can lead to poor decision-making and an inability to focus, not to mention cripple a business.
What can business owners do to avoid these pitfalls?
By taking steps to avoid these common pitfalls, business owners can ensure that their partnerships remain strong and successful for years to come.
1. Don’t jump in too fast
This is by far the most common pitfall I see people make – leaping into a partnership way too quickly without assessing if it truly makes sense.
The only reason to have a partner is because they have something you lack – think about what each person brings to the table in terms of knowledge, money, or time. If you already have all of these elements, a partnership is likely not worth it.
A simple rule of thumb: if both partners have the same skills and knowledge base, they should not be in a business together.
Remember that in many cases, it’s better to simply pay someone for their services instead of giving away equity . As an example, many solid operators can be hired for significantly less and likely not require equity.
Equity is the most expensive thing you give up in a relationship and should only be given to someone who will drive growth in the long-term. Make sure to consider the long-term implications and whether or not equity is truly necessary.
2. Establish clear goals at the outset
Before entering into any partnership, both parties should have a thorough understanding of each other’s goals and expectations for the venture.
Are you both potential partners aligned on a big picture vision, values, and interests? Make sure you’re both on the same page and have a shared understanding of what you hope to achieve.
You want to work with someone you’re proud of, not just able to tolerate, so find a partner with complementary skills and a shared vision.
3. Put together an equitable written agreement
Make sure your agreements are clear and well-documented so that everything is fair and everyone knows what to expect.
If you don’t have a partnership agreement , you are taking a massive gamble. Relationships between partners often fail because of unmet or unspoken expectations.
Be willing to have a hard conversation about this up front – ideally everything goes smoothly and you never have to use it, but make sure you have a contract that leaves no room for interpretation.
Partners should agree on a plan for how decisions will be made to ensure that everyone is comfortable with the process and that power is distributed evenly.
4. Build trust and communicate regularly
Trust is essential in any partnership, and partners should take steps to build trust through open and honest communication.
Partners should remain in regular communication with each other regarding the progress and direction of the business, as well as any potential problems or issues that may arise. This will help ensure that everyone is on the same page and working toward the same goals.
Partners should treat each other with respect and listen to each other’s ideas, even if they don’t always agree on the best course of action.
How to resolve partnership disputes
If you’re experiencing conflicts or disagreements with your business partner, there are a few things you can do to try to resolve the issue:
- Allow time to cool off: I recommend giving everyone time to cool off before discussing the issue at hand to avoid emotions getting heated.
- Communicate : clear, open communication is key to resolving any dispute. Make sure you’re communicating with your partner about what’s bothering you and why. Try using active listening techniques such as repeating back what your partner has said so they know you understand them fully before responding yourself;
- Seek outside help : If you’re unable to resolve the issue on your own, think about enlisting the help of a mediator or a business coach who can help you work through the problem. The key is that this is an impartial third party who can help look at things objectively.
- Be willing to compromise: Remember that in any partnership, both parties need to be willing to compromise in order to make the relationship work. Focus on finding solutions rather than assigning blame.
How to deal with a controlling business partner
If you’re dealing with a controlling business partner, there are a few things you can do to try to address the issue:
- Be transparent : Talk to your partner about how their behavior is affecting you and the business. Make sure they understand your perspective and are clear on roles and responsibilities within the company.
- Set ground rules on decision making: Establish a set of guidelines for how decisions are made within the partnership, so that both partners have an equal say in major business decisions.
- Set up performance reviews: this will ensure both parties are held accountable for their actions within the company which should help reduce any feelings of control from either side.
- Make boundaries clear: Make sure each partner has their own clearly defined role and responsibilities to prevent one partner from controlling or micromanaging the other. Make it clear what you will and will not tolerate in terms of your partner’s behavior.
- Seek outside help: If your partner is unwilling to change their behavior, consider seeking the help of a mediator or a business coach who can help you navigate the situation.
How to force a partner out of business
It can be extremely tough to deal with a partner who’s longer committed to the business or even worse, sabotaging the company.
Remember that forcing a partner out of business is a last resort and should only be considered after all other options have been exhausted.
A couple pieces of advice:
- Before taking any rash action, I’d recommend talking through your concerns with your partner and trying to find common ground on how to move forward. The ideal scenario is to try and up with an amicable solution before taking any drastic action.
- Review any contracts or partnership agreement signed between individual partners – check whether your business partners have broken any terms which could give grounds for forcing them out.
What that said, there are a few things you can do to try to force a partner out of the business:
- Buyout : One option is to offer to buy out your partner’s share of the business. This can be a difficult and expensive process, but it can be a good way to remove a partner who is no longer committed to the business. If you’re interested in a deeper dive, I’ve written a detailed post on buying out a business partner .
- Mediation : Another option is to try to mediate a resolution with the help of a third party. A mediator can help you and your partner come to a mutually beneficial agreement.
- Legal action : In some cases, it may be necessary to take legal action to remove a partner from the business. This can include filing a lawsuit or seeking a court-ordered dissolution of the partnership. Depending on the severity of the situation this may be necessary in order for you to gain full control over the company.
Make sure you consult with a lawyer to understand the legal implication and actions to take for your specific situation.
Business partnerships can be incredibly rewarding and have many advantages, but they can also be filled with conflict and personality clashes. While it’s impossible to avoid all disagreements, knowing how to manage and resolve them is crucial.
Similar to personal relationships, business partnerships require dedication, understanding and compromise in order to survive. By understanding common problems that arise in many partnerships, and by being aware of the behaviors that can destroy a partnership, you can be better prepared to navigate the challenges that may come your way.
When differences arise, it’s important to remember that the best way to handle them is through open communication, understanding and respect.
I hope you found this post helpful – if you have any other ideas for working through partnership issues I’d love to hear from you in the comments.
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How to deal with business partner problems
In an ideal business world, a strong partnership would lead to success and happiness. While dreaming up your business, you probably didn't give much thought about how to deal with a difficult business partner. If you have a bad business partner, it can affect all areas of the business. In fact, a recent Forbes article described working with others as a business risk.
What makes a good business partner?
A business partnership is a relationship, and like all relationships, you have to choose your partner wisely . Sometimes all it takes is a good idea to come together. In the long run, though, a healthy business partnership will require much more than that.
You can often spot the signs of a partnership gone bad by examining what makes a good partner. If some of these critical elements are missing, it might be time to take the first intervention steps.
1. Trust . Your financial health and livelihood are on the line. If you can't trust your business partner, you are taking a huge risk for your financial future.
2. Respect . You expect your partner to take your ideas and plans into consideration. If you aren't willing to do the same, what is holding you back?
3. Mutual goals . An idea remains an idea without a business plan. It's essential for you and your partner to have similar end goals in mind. Both of your ideas for a good business need to head in the same direction.
4. Communication . This element is a big one. Poor communication in a business partnership is a recipe for disaster. It's one of the first improvement areas to examine if you're wondering why your business partnership is not working.
Time to talk it out
In the business-building process, you can sometimes get caught up in the excitement. Creative juices are flowing, and you have the world of potential at your feet. It's sometimes easy to set aside important conversations during the start-up process. This behavior could even continue during times of success.
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Improving communication can also solve some issues. As your company grows, especially if it grows expeditiously, your role might become less clear. The same lack of clarity could also apply to your business partner. Your idea of the changing roles could vary from your partner's, so it's imperative to have a discussion. Lack of defining your responsibilities could lead to each of you feeling the other is crossing boundaries.
Another frequently debated topic between business partners is compensation. Partnership agreements are partially created for these purposes. Successful company owners must reevaluate the terms of these agreements over time.
Too often business owners side-step the discussion of personal compensation. By avoiding the topic, one partner can feel like the other is taking advantage. Setting clear and fair standards can help save the relationship, or can make it clear that it's not working out.
Since communication is the first step toward resolution, what does that need to involve? Communication styles vary, but a general guideline can help you get started.
- Set up a meeting with ample time to prepare
- Come prepared with an outline or notes
- Talk it out with a blunt discussion if necessary
- Review your business plan together
- Remain respectful
- Allow enough time to process after the meeting
What to do if communication fails
If you have tried to communicate with your business partner and are still having serious problems, look ahead. What will you do if the issues are not fixable?
Take some time to review your partnership agreement. This is also a good time to get a third party involved. You could have an attorney review your arrangement in case the situation progresses. It could also just mean finding and hiring a business coach to help you resolve your problems. If these attempts are unsuccessful, the partnership problems might be unfixable.
Consider a breakup
Savvy individuals know that any failing relationship needs a backup plan and an exit strategy. Review any legal ramifications of dissolving the partnership with an attorney. Find out what your partner will need or demand and establish your ideal breakup scenario. Breaking your partnership should be the last resort. Sometimes it's best for the company and you personally to remove the negativity and start again.
Business partnerships arise from great ideas and big plans. Whether your company is experiencing success or is losing money , a shaky business partnership can be costly. Sometimes the best way to see if your relationship has declined is to take a step back.
Consider what makes a good partner and see if these qualities apply to yours. If you no longer think they do, start communicating until you reach a new understanding. Failure to resolve the issues might mean a breakup is in your future.
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6 Challenges Confronting Every Business Partnership There is no perfect partner. Add that to the list of what you have to make work to succeed.
By Murray Newlands • Sep 30, 2015
Opinions expressed by Entrepreneur contributors are their own.
For every Danielle Weisberg and Carly Zakin -type union to come out of Silicon Valley, there's been a handful of soured partnerships. It's not hard to see why. Business partners spend an enormous amount of time together and make career-threatening decisions. They have to support each other through ups and downs and plenty of isolation (even through the trough of sorrow ), and they make personal, financial and emotional sacrifices to do so.
While it's often better to find a partner than to take up the stressful task of building a company alone, getting along with that partner isn't always going to be a walk in the park. Before setting up Due.com with my business partner John Rampton we worked on many small projects together. I recommend starting slow and building up to a larger project.
Here are some of my observations of what entrepreneurs have to deal with from their most important working relationship.
1. Different management styles.
Different management styles don't have to be a big problem. Some partnerships take on parental dynamic: one is a disciplinarian who is task-oriented, slightly distant and intent to get things done. The other is laissez-faire, relatable and prioritizes a ''chill'' company culture over a well-oiled machine. In the best case scenario, one lays down the law and keeps the ship on course, while the other keeps employees happy.
Unfortunately, sometimes this backfires: the taskmaster might be tired of having to manage her own business partner; the other might feel overwhelmed by having to be a boss. Or, both partners might be pure "idea people" unaccustomed to telling others what to do and unable to step up to the plate, or they might both be highly disciplined control-freaks. This is a difficult problem. It takes time and energy to establish a balance.
Related: 7 Reasons Smart Startups Establish 'Coopetition'
2. Personal habits.
In the early stages of a new company, the rules for maintaining a work-life balance don't really apply for founding members. Those who have offices can expect to stay there well past traditional quitting time. A lot of people can't take the pressure. There's a huge range of different vices and vulnerabilities that can jeopardize a business partnership, especially if there are no other employees: substance abuse, alcohol, lapses in ethics, and mental health issues.
As everyone has their own coping mechanisms, there's no clear way how handle these types of obstacles except on a case-by-case basis. It's important that both partners keep an open mind, give each other time and space when necessary, learn to recognize triggering moments, and not interfere until asked or until it becomes necessary (including legal liabilities).
3. Financial problems and equity.
Another struggle many partnerships face is the nature of the partnership. After all, not every team is split 50/50. The founder might be willing to put up all the money and just needs tech or business help to get it off the ground. In this case, how is equity divided? How is the secondary partner valued? Are the guidelines absolutely clear to both parties involved? These questions should be addressed at the end of the courting period, but it's eminently important that there are no lingering tensions going forward.
4. Setting boundaries.
If partners become best friends there's a chance that every decision or disagreement could be taken personally. Best friends who become business partners can face unexpected situations that compromise their professional and personal relationship.
On the other hand, best friends who know each other really well might understand how to keep each other motivated and how to balance work and each others' strengths and weaknesses while maintaining a unified vision.
Related: 13 Tips to Create the Perfect Partnership
5. Commitment levels.
Much like issues over equity and financial contribution, it's necessary to be perfectly clear on what each partner is looking for. One might just be in it for the experience, but not willing to put in the time and dedication required. Maybe they want in but keep their day job, invest little money, or lack needed skills outside of their own specialization.
This will become harder to navigate as the startup experiences ups and downs. A partner who is excited in the first month might not be as excited by the seventh month.
6. Disparities in skills and roles.
Entrepreneurs understandably seek partners who are at least as experienced as themselves to jumpstart the business but that doesn't always happen. After all, they're asking someone to quit their day job, take a huge salary cut (if they're lucky enough to get a salary!) and live on their savings to follow a vision that hasn't been actualized yet. Few established professionals are willing to take these risks. Then it becomes a matter of finding anyone willing with the kind of qualifications you're looking for.
Eventually, this means that while it's a learning process for both parties, it's more of a learning process for one person and no one wants to be, or work with, a co-founder who can't keep up with the company.Look for a business partner with a demonstrated ability to work hard for long hours, and a keen willingness to learn new skills and experiment with ideas.
Building a relationship with a business partner requires just as much work as any marriage. By being aware of the challenges you will face, you can be prepared.
Related: Why This Fitness Star Thinks Differently About Partnerships
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4 Rules for Handling Conflicts With Your Business Partner
By Ty Kiisel
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Article Summary: Working with a business partner has its rewards as well as its challenges. Like any relationship, it might be unreasonable to assume that you will always get along. With that in mind, here are 4 rules for handling conflicts with your business partner:
- Plan ahead, when possible, and stop fights before they happen
- Don't rush to judgement
- Have an "Active Listening" session
- Don't be afraid to ask for outside help
Working with a business partner can be very rewarding if you know how to deal with the natural disagreements and conflicts that crop up. Keep reading to learn more.
The one certainty with a business partnership, as with any close relationship, is that conflicts will arise. But when you’re working very closely with another person or group, it can be easy to get emotional and lose sight of the larger picture, particularly when the stakes are high and money is on the line. Which is why learning how to handle conflicts with your business partner is so important.
A conflict with your partner doesn’t have to throw your business into a tailspin. There are steps you can take to contain disagreements, manage them so each party feels heard, and find a resolution that leaves your partnership, and your business, safely intact.
Here are four tactics that will help you handle conflicts with your business partner:
1. Plan Ahead When Possible, and Stop Fights Before They Start
If there are topics you know will likely prompt a disagreement down the road, see if you can cut them off before they start. For example, one of the most common fights among partners is that one partner feels she’s doing an unfair amount of the work. If you’re heading into a new expansion phase, or holiday season, or any other unusually busy time, lay out specific responsibilities in advance, so there can be no questions about the division of labor.
2. Don’t Rush to Judgment
For the owners and operators of a small business, every decision can seem large, and often deeply personal. When your partner disagrees with you on an issue that’s important to you, it can be very easy to shut down and shift into battle mode. But finding the patience to stop, take a breath, and consider your partner’s position will be a huge determinant in whether the argument gets resolved quickly and painlessly, or not. Remember the bigger picture: you entered into this partnership because you both shared a vision for the business, and you each brought strengths to the table. If you value your partner as a whole, you must value her viewpoint on this issue, even if you don’t agree with it.
3. Have an “Active Listening” Session
This is a common dispute-resolution tactic in which each person agrees to sit and listen to the other’s position and opinion, without speaking or reacting, for a set period of time — usually around 3 to 5 minutes. It’s a remarkably useful tool for cooling tempers and giving each side new insight into the other’s position. In a business partnership, it matters less who wins than how each partner feels once the conflict is resolved — if one side feels marginalized and resentful, that result can poison the partnership, and the business, over time. Practicing active listening and other exercises like it can ease any ongoing tensions and make each side feel heard.
4. Don’t be afraid to ask for outside help.
Sometimes, a neutral third party is what’s needed in order to resolve a dispute. The entire field of mediation exists for this reason. Mediators are trained to handle disputes of all kinds, and using one could lead to a cleaner dispute, a faster resolution, and an outcome that is more favorable to both parties. If the outcome is a compromise, a mediator can ensure that each side is giving up a fair amount, and that no one leaves the negotiating table feeling ripped off.
If a professional mediator doesn’t sound appealing, you could consider using a friend or colleague, though the person you choose should be fully neutral, and trained in handling disputes. Otherwise you could wind up with a mediator who does more harm than good.
Conflicts are a given, but you can’t lose sight of the larger goal: to resolve the disagreement as effectively and amicably as possible, so that you and your partner can continue running a healthy and growing business. These for tips for dealing with conflicts with your business partner will help you work together and find success while doing it.
Author Ty Kiisel
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To Solve Big Problems, Make Everyone Feel Included in Your Mission
- Rajiv J. Shah
It’s human nature to want to work towards something bigger than a paycheck.
It’s human nature to want to spend our days working on something more than a paycheck, and the best leaders find ways to connect their teammates’ work to something bigger. That starts by making everyone feel included in the mission. If your team feels connected to the mission, then making big bets and solving big problems will always be within your reach. In this article, the author discusses how several prominent leaders instilled their teams with a sense of the organization’s larger purpose, and how you can do the same.
No matter their rank, teammates want to believe that what they do, day in and day out, matters. Yet meaning can be incredibly hard to find. Every job has its good days and bad, its high points and low, its crowning achievements and mundane expense reports. Drudgery can fill too many days, while inspiration can fill too few.
- RS Rajiv J. Shah is president of The Rockefeller Foundation. From 2009-2015, he served as administration to the U.S. Agency for International Development. Shah’s new book is Big Bets: How Large-Scale Change Really Happens .
Daryl Hall accuses John Oates of ‘ultimate partnership betrayal’ in plan to sell stake in business
NASHVILLE, Tenn. — Daryl Hall has accused his longtime music partner John Oates of committing the “ultimate partnership betrayal” by planning to sell his share of the Hall & Oates duo’s joint venture without the other’s permission, Hall said in a court declaration supporting his lawsuit to keep the transaction paused .
In the declaration filed Wednesday in a Nashville chancery court, Hall also lamented the deterioration of his relationship with and trust in his musical partner of more than a half-century. The joint venture in question includes Hall & Oates trademarks, personal name and likeness rights, record royalty income and website and social media assets, the declaration states.
In his own court filing later Wednesday, Oates said that he was disappointed in Hall’s “inflammatory, outlandish, and inaccurate statements about me,” and argued that he had been trying for some time to enhance their business partnership.
A judge has issued a temporarily restraining order blocking the sale of Oates’ share of Whole Oats Enterprises LLP to Primary Wave IP Investment Management LLC while legal proceedings and a previously initiated arbitration continue.
A court hearing is scheduled Thursday in the case. Hall is seeking further court action to keep the transaction on hold.
“While falsely contending over the last several months that the Oates Trust wanted to maintain ownership in WOE, John Oates and the Co-Trustees engaged in the ultimate partnership betrayal,” Hall said in a declaration. “They surreptitiously sought to sell half of the WOE assets without obtaining my written approval.”
Oates argued in his filings that the court should not extend the temporary restraining order, and he said he didn’t want to publicly address details of business dealings that he considers “private matters.” But in a rejoinder to the suggestion that he was the one causing a rift, he argued that Hall has been trying for years to be seen as an individual.
“Over the years, Daryl has consistently and publicly been adamant about being perceived as an individual rather than as part of a duo or group. Thus, he has insisted on our being known as ‘Daryl Hall and John Oates,’ rather than the more commonly known ‘Hall & Oates,’” Oates’ declaration said. “On this point I agree. I now must act with truthfulness and make decisions that are right for myself, my family, and my artistic future.”
A Nashville chancery court judge issued the temporary restraining order on Nov. 16, the same day Hall filed his lawsuit, writing that Oates and others involved in his trust can’t move to close the sale of their share until an arbitrator in a separately filed case weighs in on the deal, or until the judge’s order expires — typically within 15 days, unless a judge extends the deadline. Hall’s declaration was initially filed in the arbitration case.
The lawsuit contends that Hall opened an arbitration process on Nov. 9 against Oates and the other defendants in the lawsuit, Oates’ wife, Aimee Oates, and Richard Flynn, in their roles as co-trustees of Oates’ trust. Hall was seeking an order preventing them from selling their part in Whole Oats Enterprises to Primary Wave Music.
Primary Wave has already owned “significant interest” in Hall and Oates’ song catalog for more than 15 years.
The lawsuit says Oates’ team entered into a letter of intent with Primary Wave Music for the sale, and alleges further that the letter makes clear that the music duo’s business agreement was disclosed to Primary Wave Music in violation of a confidentiality provision. Additionally, Hall said in his declaration he would not approve such a sale and doesn’t agree with Primary Wave’s business model.
Hall said he was blindsided by Oates’ plan to sell his part of Whole Oates Enterprises.
“I am deeply troubled by the deterioration of my relationship with, and trust in, John Oates,” Hall said in the declaration.
Hall said in his declaration that the ordeal has unfolded while he’s been on tour throughout the U.S. West Coast, Japan and Manila. Hall said he believes Oates timed the sale “to create the most harm to me.”
Hall accused Oates of becoming “adversarial and aggressive instead of professional and courteous” toward him in the last several years. As part of a proposed “global divorce,” Hall said he was entertaining Oates’ idea to dissolve their touring entity and a separate partnership related to their musical compositions and publishing, while Hall raised the idea of dissolving Whole Oats Enterprises.
Daryl Hall and John Oates got their start as Temple University students before signing with Atlantic Records in 1972. In the decades since, they have achieved six platinum albums and many more Top 10 singles with their unique approach to blue-eyed soul. Hall & Oates was inducted into the Rock & Roll Hall of Fame in 2014 and the duo’s latest album, “Home for Christmas,” was released in 2006. The pair continued to perform as of last year.
“We have this incredibly good problem of having so many hits,” Oates told The Associated Press in 2021, just before resuming a national tour that had been delayed because of the coronavirus pandemic. “Believe me, it’s not a chore to play those songs because they are really great.”
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Judge Weighs in on Bitter Dispute Between Daryl Hall and John Oates
Hall has accused Oates of committing the “ultimate partnership betrayal” when he moved to sell off his portion of a joint venture. Oates denies wrongdoing.
By Jamie McGee and Julia Jacobs
Jamie McGee reported from Nashville.
The nature of the dispute between Daryl Hall and John Oates, which had been obscured in sealed court documents, became clearer on Thursday as one of pop music’s most recognizable and long-running duos put their fight in front of a judge in Nashville.
Details of the collapse of the 50-year artistic collaboration and business partnership between the two had been trickling out for days in court papers submitted before Thursday’s hearing in Chancery Court, where Hall and Oates were represented by lawyers but did not appear.
Hall, the lead singer and songwriter for many of the band’s hits, is arguing that Oates violated their contract by moving to sell his portion of one of their business partnerships without Hall’s approval.
Hall’s lawyers went to court to block any sale while their business disagreement goes through a separate arbitration process. On Thursday, Chancellor Russell T. Perkins granted their request, preventing Oates from going further in the agreement until the arbitrator resolves the impasse, or until Feb. 17.
What is clear from the court documents unsealed so far is that the court case is a byproduct of a dramatic monthslong uncoupling of the two musicians, who rose to fame in the 1970s, establishing themselves as pop icons with hits such as “Rich Girl” and “Maneater.”
In papers dated earlier this month, Hall, 77, wrote that in recent years, Oates, 75, had become “adversarial and aggressive” toward him and had raised a series of business disagreements through a “revolving cast of lawyers.” Hall wrote that late last year, Oates asked to dissolve the duo’s touring entity and the business partnership that oversees their music publishing, leading them this past summer to enter mediation — a process in which a neutral arbiter helps two sides work out their differences outside of court.
But in October, Oates’s side informed Hall that Oates was planning to sell his portion of a joint venture that oversees certain trademark and music royalty rights. The buyer was identified as Primary Wave Music, a New York company that specializes in marketing estates and song catalogs. Hall wrote that he felt blindsided by the plans.
“I am deeply troubled by the deterioration of my relationship with, and trust in, John Oates,” he wrote in a court filing, calling Oates’s actions the “ultimate partnership betrayal.”
At Thursday’s hearing, Tim Warnock, a lawyer for Oates, denied that his client was making a deal behind Hall's back. “Mr. Oates has proceeded exactly as he was allowed to proceed,” he said. “Mr. Hall could have done the exact same thing himself.”
Lawyers for Oates have asserted that the dispute should be solved in arbitration, arguing that Hall created the time pressure on himself by waiting nearly three weeks to bring the case to arbitrators.
“Any adverse consequence based on the passage of time is a problem of Plaintiffs’ own making,” they wrote.
Hall and Oates’s history together began in 1967, when the college-aged musicians intersected while performing at a sock hop in Philadelphia. Hall invited Oates to play guitar for his band, and a few years later, they started writing songs together, landing a record deal in 1972.
From the mid-1970s to 1990, Hall and Oates landed 29 hits on the Top 40 list — six of them No. 1 records. Heavily influenced by Motown and Philadelphia soul music, Hall and Oates’s hits captured the highs and lows of romance, from the exhilaration of “You Make My Dreams” to the wailing breakup song “She’s Gone.”
The pair has made 18 studio albums together and was inducted into the Rock & Roll Hall of Fame in 2014, after seeing a resurgent interest in their hits as they became favorites for TV, movies and as hip-hop samples. Hall and Oates performed together as recently as 2022, but this past year, there were hints of discord when the singers set off on separate performance schedules.
The joint venture at the center of the dispute is called Whole Oats Enterprises LLP — a nod to their initial group name and the title of their first album.
Hall wrote in court papers that the LLP oversaw trademarks, social media assets and website assets, saying he was fearful that a sale by Oates to Primary Wave could leave his name and likeness vulnerable to exploitation.
Billing itself as the “home of legends,” Primary Wave has become a frequent buyer of song catalogs and other assets owned by famous musicians. It has spent hundreds of millions of dollars in recent years on stakes in the catalogs of Bob Marley, James Brown and Johnny Cash, among others. The company has said it already owns “significant interest” in Hall and Oates’s catalog, acquiring in 2007 the publishing interests of the songwriters Sara and Janna Allen, who were behind some of the band’s biggest hits.