3 Reasons Why Business Partners Break Up and How to Prevent Them

| Categories: Business , Governance

Blog by Fuel Accountants

For many business owners, partnerships are an ideal way to run a business. Operating a business with a partner means you don’t have to make all the decisions on your own. It means you have someone there with you, to help you carry the burden and share ideas with. That can be a great thing when it lasts.

Unfortunately, many business partnerships fail. Although they fail for a variety of reasons, there are some main factors that contribute to a business partnership breakup. Here are 3 reasons business partners break up, and steps you can take to prevent it from happening to you.

1. Unequal contributions

All partnerships go through periods where one person contributes—their time, money, energy, or other resources—less than the others. That’s normal. When it happens over a prolonged period or becomes a pattern, resentment can set in and the other partners can begin to feel taken for granted.

In some cases, a disparity in contributions is natural. For example, if one of the partners has a lot more money or time to invest. These situations require a conversation, however, to ensure that the inequality is addressed and made up for in other ways. If one person has more money to contribute, can the other make it up by contributing more time? If one partner is in a stressful period—maybe they need to step back for a few months due to health issues—can they pick up the slack later so the other partner can take some time off?

Make sure this discussion involves quantifiable amounts. You can’t measure “work extra” but you can measure “work an extra 6 hours a week for three months.”

Unequal contributions can be addressed and managed but all partners need to talk about the situation and develop a reasonable and realistic plan for ensuring the disparity doesn’t become an insurmountable problem.

2. Not hiring help

Partnerships run into trouble when the people involved think they can handle every issue that comes their way, even if it falls outside their area of expertise. It doesn’t matter how many people are involved in the partnership, if none of them are good with numbers none of them should be doing the accounting.

When people take on too many activities outside their expertise, problems arise. Mistakes get made and people get blamed. Relationships can sour.

Discuss with your partners your areas of expertise and activities that you aren’t comfortable doing. Any tasks that no one has expertise in should be given to a professional so that each of you can focus on the areas you’re good at and comfortable in.

3. Differing visions

Business partners should have a shared vision for the company so they’re all working towards the same goals. It’s okay for partners to have slightly different views on how to achieve those goals, but overall the vision should be aligned.

Problems can take hold when partners have deeply different visions for the company and how to meet their goals.

Ensuring a shared vision is an important step. To do so, make sure your company has a formal, written strategic plan. Work with your partners to write and review the plan periodically. Make sure everyone remains committed to the same vision, and address any shifts in perspective that may have occurred.

If you’re about to start a business partnership, discuss with your partners why they want to run a business, what their vision is for the company and what their long-term goals are. Make sure everyone is at least somewhat aligned.

Final thoughts

Business partnerships can be incredibly rewarding, but they also have the potential for issues. Open communication about your ability to contribute, your skill sets and your vision will help your partnership to stay on track and prevent a breakup.



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