Disputes are a normal part of running a business, particularly when you’re working in a business partnership. You can’t always avoid issues with your business partner (or partners), but you can take steps to manage the impact of these disputes on your business and personal life.
Conflict is normal in any partnership, including a business partnership. When a dispute arises with your business partner, it can be extremely stressful and have an impact on your personal life as well as your business operations.
Here are some general tips to help you understand and get help to resolve a dispute with your business partner.
Get to the heart of the issue
Understanding what might be causing or contributing to a business dispute could put you a better position to find a solution that works for everyone.
Here are some of the common reasons a dispute might arise in a business partnership:
- Financial aspects – This can include debts, loans made to a business by one partner, financing, personal loans, the partners’ level of reinvestment in the business and division of profits.
- Disagreements in business planning decisions and future direction – For example, one partner might want to retire, move overseas or sell their share of the business.
- Lack of clarity of roles – Sometimes unclear expectations, different values and not feeling any appreciation from a partner can lead to resentment.
- Differing styles and techniques – People have different communication styles and approaches to resolving differences. Some people might get angry or upset, while others may shut down and be hard to communicate with.
- The involvement of family members, who are not business partners – Many business decisions can be influenced by family members who are important to a business partner but not involved on the day to day running of the business.
- Breakdown of personal relationships – For example, friends going into business together or families where complex personal issues can arise.
- Health and personal challenges – For example, one partner might be faced with health challenges which impact their role in the business.
Sometimes, disputes in a partnership can be the culmination of several small issues that weren’t resolved earlier. This can lead to a breakdown of communication and trust, which can make disputes more difficult to resolve.
Keep lines of communication open
Even with complex and legally drafted agreements in place, open, honest and respectful communication is often the best way to restore trust and resolve partnership disputes.
When trust breaks down and business partners don’t feel respected or appreciated, an acknowledgement or apology can be an important step.
Try to focus on why you decided to go into business together. Explore what you’ve shared in terms of values, friends, common interests, skills and experiences and your personal, lifestyle and business goals. From here, you can then look at how you can move forward, even if that means major changes to your business and relationship.
Look for a win-win situation
If you can find a way to work with your business partner to understand your differences, re-establish trust and rebuild your mutual respect, you could then plan how to get your business back on track or even explore solutions you hadn’t considered before.
As an example, our advisory service assisted a business in which the partners decided to dissolve their partnership and establish two separate businesses. Since the partners wanted to offer services which complemented each other, rather than competing with each other, they agreed to refer clients to each other and continued on good terms.
Get external help when you need it
You might need to engage a mediator to work through your dispute. As a first step, you might like to consider our SBDC dispute resolution service or low cost mediation service.
Dealing with a business partnership dispute can impact your physical and mental wellbeing. It’s normal to feel stressed, anxious or disappointed when things don’t go as expected, so make sure you get the support you need.
Depending on the issue, you might need to get professional advice from your accountant or lawyer to handle specific aspects of the dispute.
Overall, you want to find a way to resolve your dispute, dealing with the most urgent issues first while protecting your business reputation and profitability as much as possible.
Find out more
For more information, read our tips on resolving a dispute or learn about the steps involved in ending a business partnership.
