A business partnership is a bit like a marriage. You and the other party have shared responsibilities, risks and benefits from the relationship. The arrangement is one that you enter into through mutual agreement and that either party can later end.
Conflicts with a business partner could lead to intense personal stress and possibly the closure of your business if you can’t resolve things amicably. There are ways for you to potentially avoid some of the most destructive conflicts that could affect your business partnership.
When you draft your partnership agreement, you put yourself in a position to avoid those potential future conflicts.
Talk openly about your roles
One of the most important steps when you enter a business partnership is to talk thoroughly with the other party about what you intend to do with the business and what you expect from them. If you don’t have clear expectations, you might want things that the other is incapable of providing.
Have a plan for conflicts
Another crucial inclusion in your business partnership agreement is a clause discussing what happens if you disagree about something. For example, if a big corporation offers to buy your business, one of you may want to take the offer while the other one staunchly refuses. You need to have a system in place to resolve that conflict and make a decision that both partners can accept.
Create a viable exit strategy
Do you expect that your partner will retire before you because of the gap in your ages? If so, you need a plan in place to buy them out of the business when the time comes.
Do you expect that you will be the one who moves on first because this is merely a stepping stone toward a different career path or a way to generate money for a future endeavor? You should include clear instructions about how you will separate your interest in the company.
Even if you have already started a business with someone else, you always have the opportunity to clarify certain matters. You can then update your partnership agreement or draft a new one if you never formally signed something at the start of your business. Being proactive about preventing partnership disputes can help you start and run a business with another person with minimal complications.