As a sole owner, seeking out business partners is normal. It could contribute to your venture’s growth and expansion. However, most business partnerships could fail for varying reasons.
Around 80% of partnerships fall apart, leading to damages that could be more trouble than they are worth. Avoid getting into problematic business partnerships by noticing the following red flags before signing the contract:
- Unequal benefits: A good partnership should be mutually beneficial. If not, the lack of balance could cause problems between you and your partner.
- Conflicting values: Differences in values could affect how you envision and approach your business goals. Incompatibility could affect strategies, hindering both you and your business.
- Refusing to change: Stable and firm business practices could be valuable, but refusing to adapt to the evolving times could be risky. If your business partner refuses to change their ways, they might take you and your business down with them.
- Distrusting each other: Regardless of why you distrust each other, it is a bad sign in a business partnership. Repercussions of distrust could cause division and management issues.
- Focusing on problems instead of solutions: Business partners work together to overcome obstacles. The partnership might not work if your partner only points out roadblocks without suggesting solutions.
- Inability to resolve disputes: It is common for business partners to have conflicting views or opinions. However, being unable to resolve them could pose a more severe problem.
If you spot these red flags, step back and evaluate why you are looking for a business partner.
Utilize your partnership agreement
Moving ahead with a business partnership is a crucial decision. When in doubt, you could seek legal counsel on utilizing your partnership agreement to address possible issues.
Including dispute-related terms and procedures in the partnership agreement could help you navigate partnership conflicts while protecting your business from long-term losses.
