A business partnership can be highly beneficial. Partners can share investments, legal responsibilities as well as day-to-day tasks.
Nonetheless, a partnership is only beneficial when all parties are on the same page. Disputes can arise and they can halt productivity and ultimately put the company at risk.
What can businesses do to reduce the risk of partnership disputes?
Early discussions are key
Partnerships can be formed in numerous ways. Two childhood friends may have always dreamed of running a business together. Two colleagues may have worked together in the past and reunited as entrepreneurs. Or, someone new may have responded to an advert requesting investors.
Whatever the scenario, prospective business partners must hold early discussions. This gives them the chance to get everything out in the open, such as ambitions, core values and skills. After these discussions, all parties will have a better idea of how to move forward. Potential problems may also be identified, which gives parties a chance to walk away before signing up for any formal arrangements.
Getting it all on paper
Verbal agreements can be meaningful, but they are difficult to enforce. Not having agreements in writing also leaves room for ambiguity. That’s why it’s important to draft a comprehensive partnership agreement. This is a contract that outlines the rights and responsibilities of each business partner.
Importantly, the partnership agreement can also contain clauses on how to resolve disputes should they arise.
Early discussions and partnership agreements can go a long way in preventing disputes. When forming a partnership or attempting to resolve a dispute, seeking legal guidance is also essential.