Joining forces to start a business with a partner may double your resources, but it can also lead to disagreements. Although disputes may be inevitable, understanding how to handle conflict can minimize the impact on your partnership.
Keep these strategies in your back pocket so you can preserve this critical business relationship while acting in the best interest of your shared company.
Create a legal partnership agreement
Even when you start a business with a close friend or family member, you need a foundation document that establishes operational and financial details. As soon as issues arise, you can refer to this document in an attempt to get back on the same page. For example, the partnership should indicate each person’s salary, initial investment, title and day-to-day responsibilities.
Establish checks and balances
Both partners should understand and regularly review the business’s finances. When only one person handles the money, the other partner may be unaware of underlying financial issues that could jeopardize the company’s future. Alternatively, create an unequal partnership instead of a 50/50 split. With this arrangement, the controlling partner retains more decision-making power in exchange for more significant financial risk.
Hone your negotiating skills
Compromise is an essential component of any partnership. When you and your partner reach a stalemate on a specific issue, try reframing the disagreement as a negotiation. Through this lens, you can try to find a solution you both find amenable.
Sometimes, a neutral third party can help you and your partner reach a resolution on a serious business conflict. A mediator is an attorney or another individual who has the training to help others mediate disputes. Often, hiring a mediator who can help guide the partnership to a solution can prevent a lawsuit and/or the end of your company.
Thinking through potential conflict areas before you start your business allows you to add provisions for these issues in your partnership agreement. With these strategies, you can position your company to weather the storms.