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How to Identify, Address and Dissolve a Bad Partnership

By
Rebecka Green
,
business.com writer
|
May 09, 2019
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> Business Basics
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Understand the signs of a bad partnership before you take the steps to end it.

Understand the signs of a bad partnership before you take the steps to end it.

Risking it all to start a new business is a daunting, sometimes lonely prospect. Entrepreneurs both new and experienced might seek out a business partner to provide security and assistance. However, when you get more than one person working on a new idea, it can be difficult to balance differences in personality, vision and leadership style. Like any other type of relationship, a business partnership is not always built to last.

Whether you're eager to begin a new partnership or looking to end one, read on for helpful tips to navigate all the stages of these complex relationships.

Before you begin a partnership

The desire to have a go-to partner to revel in your business's triumphs and grievances is natural. This honeymoon stage can fade quickly, however, especially if you do not sit down with your partner(s) to hammer out a partnership agreement. David Gage, a psychologist by training who founded business mediation firm BMC Associates, notes that the questions involved in partnership agreements do not tend to bother people until they start making money, which is when matters get complicated.

Determining who gets what cut of the profits and how many hours each person is expected to work might feel awkward, but these conversations will save you and your partner time and money down the road. Gage recommends diving into a partnership's "DNA: discussions, negotiations and agreements."

This process should go into the details, both business-related and interpersonal, that will affect your business. "You know that Godfather quote, 'It isn't personal, it's just business'?" Gage said. "I don't buy it. Different personalities, values, expectations – all of these are components that can break your business."

Gage provides a metaphor of two cars heading to the same unfamiliar location. One car has one person, the other has two. With teamwork and open communication, the car with two people will likely arrive before the car with one person navigating the journey alone. However, if the two people in the second car do not communicate or address conflict, they will fall far behind the one-person car, if they make it to their destination at all.

Signs of a bad business partnership

When balancing more than one personality and vision in a business partnership, communication is key.

"If one partner feels things are unfair, they stop communicating," Gage said. "Communication is the first casualty of a partnership gone or going bad." The implications of this can go deep into the business, with operations affected and employees taking sides. This affects retention, and "the best employees are usually the first ones to leave," Gage said.

As in any relationship, there comes a point where the involved parties need to sit down to determine whether their partnership is worth salvaging. At this stage, it is important to bring in a neutral third party to help revisit your partnership agreement. Gage discourages partners from having this person be their accountant, lawyer or any other person with some investment in the business.

Dissolving a partnership

"Partner dissolutions are a lot like divorces in that they're notorious for becoming adversarial," Gage said. Jumping into litigation can cost hundreds of thousands of dollars and hurt a lot of people in the process. "A mediation has the advantage of being private and collaborative, even at the end."

If you decide to dissolve your partnership, a third-party mediator will help partners come together to collaborate one last time. Ultimately, this can save your business and protect your employees.

When you're in a murky partnership, remember the two-car metaphor. Well-nurtured teamwork will aid your business journey while providing empathy you won't find elsewhere. But without proper care, you'll hit speed bumps and roadblocks, and potentially a dead end. With the right tools and agreements, you'll find you can make your business partnership seamless, even enjoyable.

Rebecka Green
Rebecka Green
In December 2018, Rebecka received her bachelor's in English and religion from Luther College. She currently resides in Iowa, where she provides freelance social media, content strategizing, and writing services for small businesses. She enjoys fashion and watching television shows that give her mild chest pain. You can reach her by ​email​ at rebeckag@gmail.com or find her on ​Twitter​.
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