Whether you have a friendship predating your business relationship or you found a partner when you decided you wanted to start your own company, your relationship with your business partner has a major impact on the success of your operations.
If the two of you now struggle to cooperate with one another or have differing ideas about the future of the business, that dispute could affect the company’s profit margins and future viability. How do you efficiently and effectively resolve a dispute with your business partner?
Check your partnership agreement
The first step when addressing any sort of business conflict is to review the existing agreements between the parties involved. Your partnership agreement and possibly your business plan may provide clear instructions for resolving disputes.
For example, you may have previously agreed to try mediation before taking more drastic steps. Your partnership agreement may also disabuse you of the idea that your partner has violated your rights or done something inappropriate. Once you have refreshed your understanding of your agreement with your partner, then you can attempt to address the dispute.
Have an informal conversation if possible
All too often, those in a business setting come out swinging in a dispute and will inevitably damage the relationship they have with their business partner. Instead of immediately going to court or trying to force your partner out of the business, you may want to try discussing the matter with them first.
A one-on-one conversation where you present documentation about your concerns can help you move forward with your business without damaging the relationship you have with your partner.
What if you still cannot resolve the disagreement?
If an amicable conversation doesn’t put an end to the dispute, your contract can guide the next steps that you take. For example, you may need to undergo mediation or arbitration before requesting a court hearing. You may eventually have to make some difficult decisions.
You may need to consider dissolving the business to end your formal ties to your partner or offering them a buyout. Alternatively, you could establish what you would accept for a buyout and ask them to take sole ownership of the company. Sometimes, you may simply need to have a judge review the situation and determine what would be appropriate given your existing agreement and state law.
Ideally, you and your business partner will be able to continue working together and running a profitable business after you sort out your current dispute. Taking the right steps when you disagree with your business partner can help you protect your investment in the company you jointly own and operate.