This article shares the top 10 Reasons we see business partnerships fail.
My most recent article was about Building Better Partnerships from the start, but what if you’ve already built a partnership? It could be going great or maybe it could be going a bit better. If you’re only a year or two into your current business partnership, the good news is you can still have these conversations and deal with most of the big issues before they arise.
Business partnerships are never 100% smooth sailing, and that’s ok. The good news is that there’s no time like the present to work on and evolve your business relationship to benefit both of you and the health of your company.
Finding yourself dealing with some of these? We can help you, reach out!
1) Differing vision for the future:
Maybe you want to build and hold your company but your partner wants to build and sell quickly. Maybe they’re nearing retirement and you’ve got 10 to 15 more years of work left in you. Ideally you would have these conversations before entering in business partnerships, but since you didn’t, take the time to lay out both of your desired situations and figure out a solution that you both can live with. Maybe one of you buys the other out, or you figure out a succession plan for filling their role. Even though you may have a different view of the future, this isn’t the end of your partnership. It doesn’t mean you can’t resolve your differences of opinion and come up with a solution you can both live with.
2) Differing values and leadership styles:
We’ve seen countless examples of this in partnerships: one of you is passionate about social responsibility, the other wants to focus on profit. One of you is a micromanager, one is super hands off. One has book smarts while the other has street smarts. While we could go on forever on this subject, what’s important here is identifying and finding areas to compromise that you’re both aligned with and committed to. Finding common ground will help you both see one another’s point of view and hopefully solve the issues at hand.
3) Differing communication styles:
Some leaders are direct, confrontational, and loud, while others avoid confrontation and will attempt to indirectly attack the problem at hand. Some like to handle problems right away and move on, and yet others need to dig deeply, ask lots questions and see things from multiple angles and in great detail to be able to move forward. Regardless of how you communicate or want to be communicated with, it’s critical to your business partnership’s success that you talk about it.
Identify your styles (or get help doing it) and agree on a method of communication that works for you both. In moments of stress, you’ll be better off when those conversations come up if you have a plan of attacking it in a mutually successful manner. When it comes to owning a business, it isn’t an “if” it’s a “when” difficult, stressful conversations come up. Create agreed upon ways of resolving things – think of this as the “rules for discussion” or “rules for disagreement” and build them out so you can resolve your issues productively, proactively and in a way that benefits the business.
4) Differing opinions about financial resources:
In a perfect world, you would have discussed financial goals and plans before launching your business or forming your partnership, but, as the saying goes, hindsight is 20/20. Be honest and transparent about your strategy for the business, and how finances play into that strategy. Identify who is watching the money and what the plan is for spending or saving. Being aligned about how you want to allocate your resources will help mitigate disagreements about it. It’s never a bad idea to bring in a business consultant to help develop your financial modeling.
5) Feeling isolated as a leader:
When you’re growing a business, high stakes decisions happen daily: company direction, who and when to hire, expanding your teams capabilities and how to spend capital. If one person is making all the decisions, they’re bearing an unequal weight running the whole company AND they’re having to own the consequences of the decisions made. This can lead to resentment and feelings of isolation and loneliness, which kills creativity, causes stress and breaks trust. When you start to notice this, you must talk about it. Instate weekly check-ins or reinstate them if it was something that helped you in the past. Reconnect over coffee or drinks to figure out and give a voice to what is not working, so you can redistribute the responsibility and work as a team to resolve the weight your business partner is feeling.
6) You don’t like being in each other’s company:
Surprisingly, we see this a lot. Business partners spend so much time together and are under so much stress to be successful that sometimes resentments build. When you stop enjoying working together, it’s time to shake up your routine and do something different. Go be humans together – not startup co-founders. If you’ve been fighting for too long, clear out the grievances. Get an executive coach and talk through what’s bothering you. Bringing in a consultant to assist in conflict resolution can save both your relationship and your business. Sometimes founders can be too close to the issues at hand and it takes an unbiased observer to help mediate. If you can remember why you started, and what you liked about that person in the beginning, chances are you can get back to a good working relationship.
7) Not discussing your opinions openly:
If you feel like you can’t speak your mind openly, it’s time to call in backup. Holding feelings in builds resentment and can create an irreparable fissure in your business partnerships. Figure out why you feel like this. Did something happen the last time you spoke freely? Does your partner demean or belittle your ideas? Identify the source of this feeling, and then articulate it. Don’t put the blame on them, but rather, explain how you felt when they treated you that way. Ideally, they will see and start to understand your side of the situation and work to correct it. It may take more than one try, but if you continue identifying and articulating how you feel and how you want to be spoken to, your relationship will come out stronger.
8) Second guessing each other’s decisions:
You formed these business partnerships because you trusted the intellect and intuition of your partners. You ventured into the unknown and created a startup business with this person, so why are you now finding yourself second guessing their decisions? Try to figure out the source of the doubt and connect with your partner on why this happened and how you want to make decisions together going forward.
9) Going behind the other’s back:
Whether to the board, the team, or other sources, going behind the back of your partner is a bad sign for the future of the partnership, and a bad practice to be a part of. It’s cowardly, because what you’re doing is attempting to take the responsibility off yourself when things aren’t going well. It’s one thing to want advice from your trusted advisors, but if you’re going behind your partner’s back and gathering support for your opinions, you’re undermining your business partner and the company you’re building together. You can remedy this by being forthright and having difficult conversations with your partner. If you need to rehearse the conversation with a third party beforehand, do it, just make sure you have the conversations necessary to get you both back to a place of trust and team.
10) Keeping track of wins/losses:
As in any relationship, it’s toxic to keep score in your business partnerships. Recognize that you started this business partnership because you valued what they brought to the table. Their strengths and weaknesses weren’t the same as your own. You should have different areas where you shine but that doesn’t make one of you more valuable than the other. Stay focused on tracking the business metrics you agreed upon rather than individual efforts. Try to see and appreciate what your business partner brings to the table and how you can leverage your abilities together.
If you work with anyone for a long enough time, you’ll deal with some or all of these from time to time. They can be difficult to approach but they don’t have to signal the end of your company. Take the time you need to repair what’s broken and build a plan to avoid these situations in the future. You’ll be setting yourselves, and your business, up for even more success.
What are some problems you’ve dealt with in working with a business partner?