What to Do About a Bad Business Partner

The following is adapted from F*ck Me Running (a Business)!

It’s the bane of every business owner’s existence: thinking you’ve found a great business partner, only to realize (after signing the partnership agreement) that the other person isn’t who you thought they were. 

Whether they have different goals for the business, define success differently, or there’s some other issue doesn’t really matter. The wrong partner can drag you down, cause your employees to leave, and ultimately destroy the business you’ve worked so hard to build.

The best possible scenario, of course, is to avoid entering into an agreement with a bad business partner in the first place. But if you’re already in a bad partnership, you still have options. What they are depends on your arrangement. 

I’ve had to deal with extricating myself from a terrible, toxic partnership. Speaking from experience, I can tell you that the best case is being able to work out an amicable split. It’s best not to burn bridges if you can avoid it. 

If that’s not possible, and if you’re the majority partner, the other person can’t hold you hostage. You can value the shares and forcibly buy out your partner.

But what do you do if you can’t work out an amicable split and you aren’t majority partner? That’s the situation I found myself in, so I can tell you that even when the situation seems bleak, all hope is not lost. You can still get out of the partnership. It won’t necessarily be easy, but if you’re resourceful, you can find a way.

Weigh Your Options

A 50/50 partnership that you can’t get out of the nice way leaves you with two options. First option: you can severely overpay for your partner’s shares to get yourself out of the deal. 

Second option: you can make the office environment so uncomfortable for them that they’ll leave. And, as horrible as that might sound, it’s better than overpaying a partner who’s already extracted undeserved value from your business and/or damaged it, like mine did.

By “uncomfortable office environment,” I don’t mean that I pooped on the guy’s desk. I didn’t even mold his stapler in Jell-O. Nothing like that. I actually reshaped the culture of the business. 

Once I had established the company’s core values and got the staff focused around them, they stopped following orders from this guy who clearly did not represent them. Within a few months, they were ignoring him. 

He could see that there was no place for him. The few remaining staff he had brought with him got the same message, and they either left or we let them go.

Don’t Run Away

I won’t sugarcoat it: rebuilding the culture of the company is a big undertaking. Just thinking about it might make you want to throw your hands up and run away. 

If you find yourself playing with that idea, also consider that you could be forfeiting all the time, effort, and money you’ve put in. It would be like just abandoning a bad marriage. You need to resolve it so you can fully move on.

If you own less than 50 percent of the business, your options may be limited. Hopefully, you went into it knowing that a minority owner doesn’t set the standards and the pace. You should not expect to get your way all, most, or even some of the time. 

If you didn’t think that through when you partnered, and you’re not happy now, you still have a couple of options: bring in a coach to help you work out the situation with the other owner and see if they’re willing to let you have more say in the decisions, or offer them an attractive price for your shares. The price should depend on how motivated they are to buy you out.

Know Your Partner Before You Sign

In a business partnership, you spend more time with the other person than you do with your spouse or your best friend. You have to make a lot of hard decisions together. There is money involved—often, a lot of money. Other people’s lives are affected by those decisions. 

Before you agree to take on a business partner, you’d better make darn sure that you have a strong relationship with the other person, and you’d better be 100 percent crystal clear about each other’s expectations and desired outcomes for the business and for yourselves. 

You’d also better write all of that down so there are no misunderstandings, assumptions, or confusion whatsoever. You will be holding each other accountable for this agreement, so get it all out upfront.

If I had done this, I would have been on the same page with my partner. Then, if one of us went off in a different direction, the other one could say, “Hey man, hold up. This is not what you said you wanted for the business. What’s going on? We need to talk.” The agreement would have served as a touchstone for our expectations going into the partnership, and I wouldn’t have been caught off-guard. 

Read the Writing on the Wall

Ending a partnership can seem like a tough decision. The truth, though, is that staying in the partnership is often much worse. 

Business relationships impact you and your company in ways you could never imagine. Make sure you’re clear from the get-go what you want out of the deal and what you expect from them. 

Hopefully, you’ll have a great partnership. But if you don’t, be ready to extricate yourself by any means necessary, before your bad partner drags you and your company down.

For more advice on what you need to know to choose the right business partner, you can find F*ck Me Running (a Business)! on Amazon.

Nolan Garrett is the Founder and CEO of Intrinium, a firm dedicated to providing clients with comprehensive consulting and managed services in security solutions and information technology. Voted Best Place to Work Inland Northwest for three consecutive years, Intrinium has distinguished itself as a leader in IT solutions and workplace culture. Nolan is a member of the Forbes Technology Council and the Information Systems Security Association, among other organizations. With CIO and CISO experience and a background that includes multimillion-dollar cybersecurity transformations, Nolan provides specialized insight for businesses large and small in a variety of industries.