Partnership Tension Can Be Resolved

6 Steps to Fix Business Partnership Tension

These Steps Work

Just about every business partnership gets tense at some point. Considering that you spend more time [awake] with your business partner than your spouse or life partner, problems are bound to arise. Then what? These 6 steps can help you fix the problem and cut the partnership tension.

Step 1: Understand the Problems that Feed Partnership Tension

Understanding the problem is the first step. But, when tensions rise we get blind to all the contributing factors. If there is stress over money, I always ask if a new personal need has come up. It’s not uncommon to find new personal needs that are stressing a partner. Maybe one partner needs a new vehicle. Maybe there is a medical expense. Perhaps a family member is pushing for more money.

Start by looking at all angles. That will increase understanding.

Look at the free partnership problem analysis tool. This tool helps put the problem into perspective. It’s helpful to separate personal issues from business issues. And, it’s critical to be realistic about all the sources of stress in your partnership. If the business is failing, it’s perfectly natural to feel a high degree of stress. That stress adds friction to your relationship with your business partner.

There is something for you to remember. Most of the stress I see in business partnerships are perfectly natural responses to actions that feed tension. Your partner isn’t evil and you aren’t overly sensitive. People have different points of view and need tools to reconcile their differences.

Step 2: Partnership Documents

Most stress comes up in a business partnership because there are no governing agreements. I’ve worked with law firms in dispute that had no partnership agreement! When someone is unhappy, a free-for-all ensues.

If you have Operating and Partnership Agreements in place, those need to be reviewed so that all parties understand the rules. If there are no formal documents, you want to get on that ASAP. Don’t go with some free online thing. You need to talk through the various contingencies and build remedies into those agreements. Should you need to define some rules around compensation, add them to your documents as agreements or amendments. Leave room for change.

Partnership tension can be avoided by having solid business documents. If the tension has already started, getting those documents drafted helps with trust issues because the “what ifs” are defined in advance rather than negotiated under duress.

Step 3: Discuss and Adopt New Processes

Most business partnership tension arises over money. One partner decides to take a $500 draw, but the other partner feels the business cannot afford owner draws. Tensions flare! Here’s the thing. In a business partnership, a partner doesn’t need permission to take a draw but it’s a good idea to have an agreement about how draws are to be handled. People will avoid the conversation about money if they feel that they must justify a need. Having a process in place can eliminate this. For example, you might agree that a partner may take up to $500 per month as needed but any money above that requires consensus. (Example only) Having a rule in place makes dealing with money easier. If broken? You can build penalties into your agreements, but if it comes to that, there are more serious problems.

I also like place limits on hiring, spending, and granting of employee permissions. Like parents, it’s very important that no employee drives a wedge between partners!

Step 4: Establish Regular Meetings with Report Outs

Partners that I have worked with seldom have regularly scheduled, formal meetings. I always recommend that partners meet at least once a week and that each presents a report on their activities and responsibilities. Partners should discuss what is working, what is not, and what big issues are coming up. I often provide a simple form for partners to summarize their reporting. Things always get better when the communication opens up.

Having formal meetings is very important. It’s not enough to send an email or drop a comment in passing. Sit at a table and talk. It works.

Step 5: Use an Outside Party to Moderate Your Discussions

I know, it sounds self-serving and it is. But, I also know that I do very good work and am able to save clients a lot of money by protecting their business. Getting a third party to moderate your early discussions will avoid partners having to argue out their mutual positions. A third party brings a perspective that will help your talks stay on track.

An outside party can conduct talks that lead to agreements because they come to your table with no emotional investment.

Step 6: Separation Is the Last Resort

If you enter into a process to work out the tension with separation as an option, agreements are tough to reach. Once the stress starts during your talks, things will quickly devolve to demands for a buyout.

A buyout is always an option. Right? But if we sit down with a goal of working things out knowing that we may go to buyout talks at any time, the buyout axe is always swinging right above our heads.

If we don’t have a written buy-sell agreement in place, buyout talks go off track quickly. If we complete steps 1-5, we should be able to work together for a while. If a buyout is necessary, we’ll have the terms defined. That makes it far easier to work through that stress-ridden process.

In summary, I believe most partnership disputes can be worked out if partners adhere to these steps. The business is the goose that should be laying those golden eggs. Partnership stress can kill the goose. We don’t want that, do we?

Chris Reich, TeachU

PS—Remember that all my work begins with free consultations with you and separately with your partner. If everyone feels good, we can go forward with a plan. Working problems out before they become serious disagreements will save thousands of dollars. Small tensions invariably fester to more serious disagreements. It is far cheaper to set rules before problems break out.

Chris Reich Can Help You with Your Business Partnership Tension
Business partnership tension is very stressful. The sooner you act, the easier the tension is to fix. Start with your Partnership Agreements. I can help you work through the issues at a far lower rate than an attorney.  Enjoy the rewards of your business without all the stress of partnership tension.

All work starts with FREE private consultations with all partners. No pressure, no sales. Fees are very practical and costs are less than your return on investment.

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