The Dance Between Business Partners: How to Resolve Conflicts

In the entrepreneurial world, a unique dance exists when two or more friends start a business together. The excitement of anticipated profits, the expansion of market share and company value can be intoxicating and exhilarating.

When everything is going well, the business partners flow and ebb to the same music. But what happens when one partner changes the music (i.e., the focus of the business) and the other partner objects?

There is no simple solution, because the dissatisfied partner can't walk away. There is too much invested in the business, his family is dependent on the success of the company, and his net worth is tied up in an illiquid asset.?

Walking away is not an option.?

What to Do When Conflicts Between Partners Arise

There are several steps that could resolve the conflict, clear up misunderstandings, and create a healthier, more prosperous business environment.

1. Embrace Open Communication

Often, misunderstandings and assumptions underpin the origins of conflict. Open, transparent communication can preempt many issues before they snowball into major concerns.

When conflicts arise, it's vital to immediately address them rather than let them fester. A structured discussion, where each partner openly shares their thoughts and feelings, can be helpful. Remember, it's not about who is right, but what is right for the business.

2. Adopt a Solution-Oriented Approach

Instead of focusing on the problem or who caused it, shift the perspective towards solutions. This helps prevent the conversation from becoming personal and promotes a positive, forward-thinking mentality.

Start by acknowledging the issue and understanding its impact on the business. Then, brainstorm possible solutions collaboratively, ensuring everyone's input is valued. Finally, agree on the most effective solution and create an actionable plan to implement it.

3. Leverage Each Other's Strengths

When a business is launched, it's all hands on deck. Everyone is tasked with more than they can handle and tensions can cause conflict. When conflicts are ignored, over time they can grow to unmanageable levels.

Once the business is stable and profitable, review each partner's strengths and skills and make sure they are utilized to their maximum potential.

4. What is Best for the Business

Constantly ask the question “What is best for the business?” ?Many conflicts between partners exist because personal needs are the priority. By refocusing on the needs of the business, clarity can be achieved.

5. Regularly Review the Company's Vision and Goals

Organizations are dynamic, and so are their needs. Regular reviews help ensure that the business's goals are current and relevant. Partners can use these reviews to realign themselves with the evolving needs of the business.

What to Do When You Have a Business Divorce

If conflicts still exist after pursing the approaches above, there are steps to resolve the dispute:

• Retain experienced professionals that understand the impact on the business and can provide expert advice on both legal and business issues.?
• Actively explore settlement negotiations, either informally or through a more structured settlement process.?“Game” out the possible solutions, both from a business and financial perspective.?People tend to dig in and not be willing to settle.?We have been involved in countless “business divorces” and have only seen a very few where going the distance on a dispute yielded a better result than an earlier resolution.?
• Have a clear understanding of the business agreement – in other words, get the facts under control. Make sure you understand the terms of the agreement and what each partner is responsible for.?

While conflicts in business partnerships can be complex, they are also opportunities for growth and improvement. Embracing a mindset of resolution, focusing on what's best for the business, and working towards alignment can transform these conflicts into stepping stones for success.

Sometimes, despite everyone's best and sincere efforts, the conflicts cannot be resolved. When the dance between partners is over and the music has stopped playing, please reach out to me.

To your success,

Jim Shields