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Reasons business partnerships fail

On Behalf of | Sep 22, 2022 | Business Litigation

When a business partnership succeeds, it can be incredibly helpful for both parties. It can take the company to new levels that it never would have reached if only one person was running it. This is the goal of starting a business partnership, along with choosing someone that you want to work with.

But when a business partnership fails, it can be highly detrimental to the company. Many of them are forced to close their doors. Sometimes, partners are able to split up in a way that allows the company to continue to exist afterward. But it’s always a monumental change. Here are a few reasons why this happens.

Both people aren’t as motivated

When business partners don’t share the same level of motivation, it often leads to one person working much harder than the other. This may not be resolvable if that individual doesn’t want to increase their effort. Eventually, the situation can lead to resentment and the end of the partnership.

You have different goals

It’s also somewhat important to have a similar vision for the company. If the two of you are very different goals, then it can slowly create a rift between you over time. You may both feel like the company is turning into a business entity that you never imagined and that you don’t want to run.

Your risk tolerance is different

Starting a business means taking risks. Many of these are financial. But different business owners will have different levels of tolerance for this risk. When two people can’t agree, they may not be able to work together.

One person simply isn’t succeeding

Unfortunately, there are also situations in which one partner realizes that the other partner is the weak link. Their performance just isn’t at the level that is needed for the business to succeed. They may try to encourage them or talk with them about how they can improve, but if it doesn’t happen, then they may have to dissolve the partnership.

What steps do you need to take?

Whether you thinking about setting up a business partnership or dissolving one that you already started, it’s very important to know exactly what legal steps to take to achieve these goals.