Business partnerships are structured relationships where two or more people combine their resources and knowledge to start or take over a business. In theory, partnerships allow everyone involved to benefit from their partners’ capabilities and experience.
Some business partnerships are successful and help establish thriving businesses that are profitable. Other partnerships eventually fall apart, potentially because of conflicts between the partners. Not only may the relationship between the two partners sour, but the business that they start together can potentially fail.
What are some of the top reasons for partnerships failing instead of thriving?
1. Mismatched priorities
Discussing plans for the business is an important aspect of any functional partnership. The partners need to have the same goals and priorities. If they are not on the same page about how they run the business together, then they may end up eventually disagreeing about something crucial.
Whether the partners disagree about a sale opportunity or about how to fill a vacant position within the company, their disagreements can ultimately undermine the success of the business and the partnership. Partners who don’t discuss their long-term plans before committing to a partnership may eventually realize that they have incompatible goals.
2. Inappropriate conduct
Some partnerships fail because one partner breaches their fiduciary duty. Those who help run businesses have an obligation to put the organization’s best interests first. Partners who engage in embezzlement or self-dealing can harm the company and do permanent damage to the partnership relationship.
Misconduct could also involve sexually harassing an employee or cutting corners on projects. Decisions that may harm the business overall may harm the partnership as well.
3. Uneven levels of commitment
Both partners should consistently follow through with what they promised to one another. If one partner commits more financially to the organization, then the other may have to work more hours per week to balance that discrepancy.
In situations where one partner does not display the same level of commitment to the organization as the other, that can breed resentment. It can also slow the company’s development.
Those who find themselves dealing with intractable partnership disputes may need help planning a path forward. Buyout proposals, dissolution efforts and even business litigation are all viable solutions for those dealing with a significant partnership dispute. Learning about what may damage partnerships in the long run can help people discuss matters beforehand and include terms in partnership agreements that reduce the likelihood of the partnership failing.
