Tips to avoid partnership disputes

Most business partners in California know the importance of establishing a partnership agreement early on in their venture. However important a written agreement is, it will not always prevent disputes from erupting between partners. 

These disputes do not always have to lead to time-consuming and expensive litigation. Here are some tips to avoid partnership disputes or prevent them from escalating.

Ensure the partnership agreement is detailed

A partnership agreement should include specific details about operating the business, including:

  • The role and responsibilities of each partner
  • The amount of control each partner has
  • How the partners will approach decisions
  • How to handle financial matters

Addressing these details helps business owners understand what the other partners expect from them. And reaching that understanding is one step to avoiding a dispute.

Make a plan for resolving disputes

This plan should be a part of the partnership agreement, but it is important enough to highlight on its own. Business partners can outline a fair procedure that covers the details for how partners should discuss disputes.

Avoid negative language

Business partners are often friends. However, they cannot always treat their partnership like they treat their friendship.

Forbes published an article on resolving conflicts in business and relationships. And one of the fundamental points is to keep the situation civil when discussing disputes. Focusing on the dispute alone, and not each partner’s personal feelings about the situation, can help them avoid a much larger dispute in the long run.

Remember that disputes are not always about winning or losing

The business itself often revolves around the mentality of success or failure. However, it may be helpful to approach a partnership disagreement with a different perspective.

Business partners have a common ground: the company. And prioritizing the business’ best interests can help business partners reach a fair solution, instead of taking matters to court.