Running a business is a hugely rewarding but tough exercise. There is a good deal of responsibility and countless things to be in charge of, especially if you’ve employees. A great way that most persons like to mitigate the many pressures is by entering into a partnership.
Working with business partners has its challenges and rewards. Like any close relationship, it’s unrealistic to assume that you’ll always get along. A dispute with your business partner does not have to bury your business under the carpet. There are significant steps you can take to resolve these disputes. Here are seven tried-and-tested tips to do when conflicts happen.
1. Review Your Written Agreement
A written agreement between both parties is an essential ingredient in business disputes prevention. It gives you a good framework for running the company and making informed decisions. Depending on your type of business, this could be a partnership agreement, bylaws, a shareholder’s agreement, or operating agreement.
These written agreements help the parties involved with things like:
- How to split debts and profits
- How to vote on crucial decisions
- How to handle additional capital
- Duties and responsibilities of each owner
If you already have a written agreement, review it and attempt to resolve the dispute. You can also consider updating and refining it with the help of a contract dispute lawyer when necessary.
2. Prevent Disagreements
To prevent disagreements, you need to choose your business partners wisely. Go for an individual who will approach the company with the same level of commitment and enthusiasm that you’ve and shares the same company ‘parenting’ philosophies. Simply put, ensure they are individuals you can trust, and you really get along.
Also work on creating a culture where you together with your business partners talk about concerns, issues, and ideas openly. Do not let annoyance fester, or maybe passively let your business partners do things, which you disagree with. You should know that issues will be much difficult to handle if you do not have an excellent history of talking and compromising things through.
There are some topics you definitely know will likely cause disputes down the road, try cutting them off. For instance, if you are heading into a holiday season or a new expansion phase, or just any other busy time, divide the responsibilities and duties in advance. This will help prevent one partner feeling as he is doing more work.
3. Handle Business Disputes When it Happens
While it may not seem like there are any pros to disagreements in your small business, disputes between you and your business partner can benefit it. Disagreements allow you to identify issues you need to find a solution for, helping you build up or strengthen the business.
However, conflicts can also cause issues, which damage your company, making it difficult to move forward and draining your efforts and energy.
4. Listen actively
Listening is a common conflict resolution tool that is all about understanding the perspective of the other person. It’s a great idea to have everyone involved sit and listen actively to other’s opinion and position without playing on phones, doodling on paper, checking emails, speaking, or even reacting. Learning to compromise and listen can ease an ongoing tension as it makes every side feel heard; therefore, cooling tempers.
5. Attempt Business Mediation and Negotiation
At some point, a neutral third party is what is needed to resolve the conflict. Mediators are well-trained to handle conflicts of all kinds, meaning that using one could result to a cleaner conflict, a quick resolution, as well as an outcome, which is more favourable to the involved parties. The mediation process is also confidential.
If a mediator does not sound appealing, consider using a colleague or friend, though whoever you go for should be trained and neutral to avoid more harm.
6. Engage a Business Disputes Lawyer
When you cannot resolve the conflict on your own or with an external mediator, a business dispute lawyer can offer a valuable service. A business conflict resolution lawyer will:
- Set out your obligations and rights in the conflict
- Let an impartial third party be in charge of the interests and positions of the partners to the conflict.
Contact Streeterlaw’s business disputes lawyers for assistance, and they will deliver exceptional results.
7. Business Litigation
If nothing is working, then you may be left with business litigation as your only option. Remember that litigation can be time-consuming, draining on your profits and time, and extremely expensive.
While mediation and negotiation provide an opportunity or chance for a solution, which keeps your business intact, corporate litigation in court is more likely to mean that the probable result won’t leave your business unscathed.
Also, it may be extremely damaging to have disputes out in the open because clients, customers, investors, and suppliers might lose confidence in the business.
So, before you start on litigation, first think through the effect it will have on the business. Are you seeking to force your business partner to exit or wind up your business? What is the result you’re he seeking if you take matters to court? What are your chances of winning? How much will it cost you to litigate? Determine how long the process might take.
The Final Verdict
If you’re having a disagreement with your business partner(s), it’s important to manage your emotions and attempt identifying the key problems.
It would be best if you also consider taking proactive measures earlier on to help avoid disagreements. Draft a partnership agreement even before beginning a new endeavour with a business partner, try to establish a constructive and open communication, and regularly review the agreement.
When a conflict occurs, resolving and addressing them as soon as you can is vital if you really want to preserve the effectiveness of your business and your relationship.
First, try to handle disputes internally and if that fails, consider seeking professional guidance. Try as much as you can to avoid taking the matter to court.