Entering into a business partnership can be highly beneficial. The workload, financial commitments and liabilities of the business can be shared. A functional partnership can help a business grow.
Nonetheless, business partnerships can go wrong. Partnership disputes can be very costly if not resolved quickly. Anticipating some of the more common causes of partnership disputes could help you to avoid them. Here are a two.
Financial disputes
Partners can have different stakes in a company, and this can impact their involvement. For example, a partner may invest a small amount financially and take on a more silent role. However, 50-50 partnerships are relatively common. This means that partners split profits 50-50 and generally put in an equal amount of effort in terms of workload.
Disputes can arise when a partner feels like they are not seeing a financial return on their investment. That’s why it’s so important to set out the profit share terms in a partnership agreement.
A workload imbalance
As mentioned, the expected workload of partners can vary depending on the amount they have invested in the company. However, it is important that all partners feel like they are pulling their weight. If one of two partners is rarely on site or involved with day-to-day activities, but still takes home half of the profit, this can create friction. Again, it’s important to utilize the partnership agreement here. The agreement should clearly establish the precise roles and responsibilities of each partner.
These are just two of the more common sources of conflict between business partners. If you and your partner have a serious disagreement, then it’s important to promptly seek legal guidance.