5 Reasons Why Business Partnerships Fail

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Going into business with a colleague is always an exciting venture. Unfortunately, partnership disagreements are often the cause of a failed business. If you are thinking about starting a business with a partner or you are starting to have partnership disagreements, it’s important to be aware of the most common reasons why business partnerships fail.

Our New Jersey business law attorneys have put together the most common reasons why partnership disagreements can impact your business.

#1: No Shared Vision

A common factor that starts partnership disputes is no shared vision. Once a business evolves, it’s not uncommon for different business partners to develop diverging plans and aspirations for where they want to take the company. A great way to solve this problem is to constantly meet with your business partners to make adjustments to your business plan. Setting up clearly defined goals and strategies can put everyone on the same page. When disagreements do arise about vision, you and your team can revisit the business plan to get a refresher on your overall goals.

#2: Lack of Communication

When there is a lack of communication, a company’s operations can go downhill. Communication is essential for business partnerships to succeed. Disputes often arise when one partner wasn’t aware of a decision the other made. To avoid a lack of communication, you and your partners should set up frequent meetings to discuss issues, strategies, and to make decisions together (if agreed upon).

#3: Failure to Follow Business Partnership Agreements

If you and your partner created a partnership agreement that clearly explains the role of each partner, you might find that your partner has a hard time staying in their lane. In most partnerships, one member is responsible for certain departments, such as finance and operations, while the other is responsible for marketing and product development, or other responsibilities. It is vital to collaborate to make the business work, but partners should refrain from making decisions that are not within their scope of responsibility.

If you don’t have a business partnership agreement, you should create one to set clear standards for each partner’s responsibilities.

#4: Lack of Trust

Trust is important when it comes to business partnerships. Each partner must be responsible and accountable for their share of responsibilities. When a business partner loses trust in the other, it can severely impact the company.

#5: Different Life Stages

What happens in a partner’s personal life is likely to affect the business and the partnership relationship. For example, if one partner has a newborn child and the other is an empty nester, one will likely have more time to dedicate to the business compared to the other. In these circumstances, it is vital to be open-minded and understanding. Finding a good balance can help the business thrive rather than collapse.

How to Resolve Partnership Disputes

There are countless other reasons why partnership disputes arise. In fact, partnership disputes are likely to happen in the course of every business endeavor. For such reasons, it is important to analyze your partnership situation to determine if your disputes can be resolved or if your business should be dissolved. If you’re unsure, it is best to speak with an experienced attorney. An attorney can guide you through the process and help you determine your best course of action.

Our team at M. Ross & Associates, LLC has helped businesses across New Jersey and surrounding cities resolve business problems. Our attorneys can help you find the right strategy for approaching all kinds of problems within your partnership. Regardless of how complex your partnership disagreements may be, our New Jersey business law attorneys are here to help you.

Contact our New Jersey business law attorneys today at (201) 897-4942 to schedule a consultation!