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Avoiding partnership disputes in small business

On Behalf of | Mar 16, 2023 | Business Law |

Business partnerships face challenges. At some point, you and your partner are likely to experience a disagreement.

Some disagreements can cause larger problems within the company. Fortunately, when you start a partnership, you can create strategies that help you prevent conflicts.

Use a decision matrix

Major decisions require input from all partners. They should have definite processes and strategies for making major business decisions. A decision matrix is a table that you can use to evaluate your strategies and develop alternatives. A matrix allows you to test and completely analyze the consequences or outcomes of a decision. Building a plan for your decision-making process helps mitigate or prevent disagreements in the future.

Pursue open communication

Open communication encourages you and your partner to share your thoughts, values, feelings and ideas without judgment. Make a deal to hear one another out without interruption or assumption. Then, work through the issue as a team, not as adversaries.

Write a partnership agreement

Partners need an agreement that guides how to run their businesses. You and your partner should write how to split the business, who has what roles and duties, how much you and your partner will contribute to the company and what profit distribution you should not expect. You should also discuss what you will do when the worst occurs. Discuss your decision-making process and communication procedures. You should have a partnership termination policy.

Learn to negotiate

You are not likely to get everything you want in every situation. Therefore, learn to negotiate and compromise on some issues. Learn to do both and be open to your partner’s contributions and desires as well.

If you find yourself in gridlock with your partner, consider working with a mediator or someone outside the partnership who can provide balance and an unbiased perspective.

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