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How To Handle Conflicts With Your Business Partner

Starting a business partnership can be very beneficial to your entrepreneurial career. For one, the partners can share start-up costs, meaning every member will contribute only a percentage of the initial capital. It also allows two people or more to pool their skills and create better strategies and systems that can benefit the business. A partnership is ideal because it brings more distinct ideas to the table.

Unfortunately, almost three-quarters of partnerships fail to turn into lasting business relations. Of course, the reasons for failure vary from one startup to another. But one of the biggest culprits is personality clashes. If contrasting personalities always lead to disagreements, then the partnership may be headed for trouble.

How To Handle Conflicts With Your Business Partner

However, that’s not to say no business partnership can survive such situations. In fact, disagreements are a common theme in any business run by two or more people. There is always bound to be a difference in views, especially when making important decisions.

The only difference between failed and successful business partnerships is how they handle such disagreements. So, how can you solve conflicts with your business partner for the company’s greater good? Fortunately, there are many proven ways that can help you overcome such barriers.

In some cases, you might be able to resolve your issues privately without the help of a third party. But sometimes, that doesn’t work, especially when high emotions are involved. As such, you may need to consult a legal expert(s) who can help you rationalize the issues.

Not sure how or where to find a business legal consultant? Read more for this and other effective ways of resolving such business conflicts.

What Are The Causes Of Partnership Conflicts?

As mentioned earlier, even the best partners can have a few differences along the way. But what can push two people who share the same ideologies to the corner? Here are some of the common causes of these twists and turns:

Financial Disputes

Business partnerships are advantageous because the partners can share the initial costs and other expenses. As such, you’ll not need to break the bank to actualize your dream. However, finances can also be the root cause of future conflicts.

In most cases, disputes about financial obligations and rights arise when the company is under financial stress. It's a common crisis among businesses that don’t have a clear partnership agreement. If the agreement is vague when it comes to liability and profit sharing, then there is bound to be a dispute.

Unclear Responsibilities

Many people focus more on the financial side of things and forget about division of labor and sharing of responsibilities. Of course, every partnership agreement includes this part. However, the roles assigned to each partner may not be as clear as it was intended.

As a result, one party may end up overstepping their boundaries or neglecting their duties. Consequently, the business may start recording losses, which can lead to a lot of blame games.

Mixing Business And Personal Relationships

Most business partnerships are between friends, family, or spousal partners. obviously, it’s easier to start a business with someone you already know and trust. But that personal relationship can sometimes work against your company. In fact, many business partnerships have dissolved due to personal relationship differences.

Take, for example, a business run by a married couple. As difficult as it may sound, the two partners are expected to separate their marriage and business issues. Unfortunately, many of them don’t succeed in that department. So, when marriage and financial stress strike, the business usually ends up as a casualty.

Unequal Commitment

As a rule of thumb, every partner should play a role in the success of the business and commit 100% while at it. For instance, if the business is run by two people, they should share the expenses 50/50 or as stipulated in the agreement.

However, there are some partners who don’t commit as much as it’s expected but still want a fair share of the profits. It’s a very common cause of resentment and conflict among start-ups.

Personality Clashes

This is another very common cause of business conflicts and fallouts between partners. Sometimes you can disagree on a few things with your partner, but contrasts in personalities can amplify those differences. As such, you might end up making poor decisions that could cost your business.

How To Solve Partnership Conflicts

A partner provides a different perspective on business operations. They bring more ideas to the table which allows the company to cater to the needs of all customers. However, these contrasting views can also lead to serious conflicts.

In fact, sometimes you may feel like the best solution is to end the partnership and go your different ways. But before you go to that extreme, it’d be prudent to try some of the tips below. Needless to say, these solutions can only work when both parties are willing to make the necessary changes moving forward.

1. Communicate Respectfully

Like any other relationship, a business partnership thrives in good communication. It’s a key factor in how you relate with your partner and even customers. Many conflicts often occur due to discrepancies between what’s said and what the recipient deciphers.

For instance, if you and your partner are from different cultural backgrounds, you ought to keep that in mind while conversing. Remember, it only takes a simple communication mistake for things to go haywire, especially under stressful conditions.

Respectfully acknowledging your partner’s opinions is also important, especially when you’re trying to find a solution to your conflicts. Make sure you listen carefully to what the other party is saying and articulate your views.

2. Act Sooner Rather Than Later

Communication can help prevent and solve a lot of things, but only when done in time. The more you delay the closer it gets to a point of no return. Unfortunately, this is what many business partners do. They ignore small issues and the developing trend only to notice them when it becomes a huge conflict.

As a co-business owner, don’t be afraid to communicate your frustrations as soon as possible. Let your partner know any time you feel like they’re not doing something right. For instance, if they no longer show as much commitment as they did before, be sure to air that out.

But don’t go about it in a disrespectful way. Discuss everything privately and come up with a reasonable solution. Make sure you also listen to and address their complaints as soon as possible. A business run in such environment has a high chance of succeeding.

Third Party To Handle Conflicts Between Business Partners

3. Bring In A Third Party

A third party plays a crucial role in any conflict resolution, and business partnership disputes are no exception. Although solving issues privately with your business partner can work, this method is sometimes barred by emotions. As such, you might end up magnifying the conflict instead of solving it. In such cases, you might need to bring in a mediator.

So, what’s the importance of a mediator in conflict resolution?

They're Neutral

Emotions can get the better of both partners and that can make it nearly impossible to solve any differences. A mediator acts as the much-needed neutral ground in the process. Finding a good third party allows both partners to table their grievances without unfair judgment and settle differences calmly and rationally.

They Help Establish Facts

The best way to solve business conflicts is to establish facts about the situation. Unfortunately, this can be difficult, especially if neither partner is ready to listen to the other. During such situations, both parties often have different versions of what really happened.

A mediator can help figure out a reality baseline. By going over the key points and reviewing the necessary records, it becomes easier to establish what really led to the dispute. When you have the facts on the table, neither party will feel unfairly judged at the end of the process.

They Advise On The Best Approach

When choosing a mediator, it’s imperative to go for those with enough experience in business law if possible. Remember, a partnership should be guided by the partnership agreement. It’s a lot simpler to solve conflicts when there are clear answers in the signed agreement.

But what if existing contracts don’t have the solutions you’re looking for? That's where a legal business consultant can help. Their experience in the industry, especially partnership business disputes, is crucial in finding the best approach to the problem at hand. They’ll also advise on how you should go about similar issues in the future.

4. Don’t Rush To Judgement

It’s difficult to come to a favorable solution when both parties make their personal judgments. In such scenarios, none of you will be ready to listen to the complaints of the other because you believe you already know what happened. Even when you have an idea of what transpired, it’s still good practice to listen to your partner’s side of the story.

Of course, sometimes every decision seems large and very personal. So, when you disagree with your partner, you can easily shift into battle mode. However, it’s important to always remember that you’re both working towards the same goal.

As such, you need to be patient and consider each other’s position. Focus on the strengths and the vision that brought you together in the first place. Again, this is something that a third party can help you achieve.

5. Have An Active Listening Session

As mentioned earlier, communication is a key component of any successful dispute resolution. You can apply it by holding a speak-and-listen session. Here, each person has an opportunity to speak out whatever they feel. The other partner is expected to listen keenly without reacting or speaking until their turn comes. Each turn should take between three to five minutes.

This tool helps cool tempers and gives each party insights into what the other is thinking. Basically, this works like an open forum where each partner can air out grievances and later propose possible solutions to every issue.

6. Write Down Your Thoughts

It can be difficult to organize your thoughts and table them when things get heated. After all, you’re both human and you can be overwhelmed by the flow of events. The best way to go about this is to write down your thoughts before going into the meeting.

The benefit of doing this is that you’ll be able to point out your interests and everything that you feel is wrong. Remember, you can miss some important points if you just rely on your memory. Your partner’s aggressive arguments can easily throw you off. The written information will be more of a guide in such instances.

Another advantage is the fact that it gives you enough time to process everything without any distractions. As you write down your thoughts, you recount every event that may have led to the dispute. Therefore, you’ll be ready for any questions that may be posed to you during the meeting.


Starting a business partnership can feel like a dream come true, and rightly so. Splitting expenses allows you to run the company of your dream while still saving enough money. The diverse ideas brought by the partners also help improve the business. However, like any other relationship, business partnerships also have conflicts.

Some of the disputes are small and can be resolved quickly, while others may need legal intervention. Either way, these problems can be solved if both parties are willing to invest their time and resources in the available solutions. Fortunately, there are plenty of options you can try.

Respectful communication is one of the best ways to handle conflicts with your business partner. It's also important to air your frustrations as soon as possible before the situation escalates. While at it, make sure you write down all your thoughts and proposals before going into a meeting with your partner. Bringing a third party can help both of you establish facts, which is a crucial step in conflict resolution.