Business partnerships, like any close relationship, aren’t always free from conflicts. When you’re working closely with another person or multiple people to keep your business running, it can be easy for emotions to run high – especially when money is on the line.
Fortunately, a dispute with your business partner doesn’t have to create havoc for your business. Here are four ways to resolve conflicts with a business partner while keeping your business intact:
1. Plan ahead
Disagreements are bound to arise in any relationship. However, with business partnerships, you can make plans for how disputes should be handled before they happen by crafting a management agreement together. Depending on your business entity, a management agreement can specify what happens when you and your partners disagree.
Your management agreement can outline if one partner has the final say over the other in specific matters or require partners to mediate if they disagree. A well-crafted management agreement can resolve discord quickly before it disrupts your business.
2. Negotiation
Successful business partnerships rely on open communication and compromise – after all, it’s not realistic for one partner to get everything their way. Before turning to formal dispute resolution techniques, you should try to work out the matter with your partner directly.
If both parties are willing to listen and compromise, you may reach a reasonable agreement with negotiation. Settling the matter together can help strengthen your relationship for working out future disagreements.
3. Mediation
In business mediation, a trained independent third-party helps partners work through disagreements and find a middle ground. While mediators charge a fee for their services, it’s a small price to pay to keep your business running smoothly.
The mediator doesn’t take sides in a business dispute. Instead, they ensure the conversation remains productive using dispute-resolution techniques to guide partners towards a solution that works for both of them.
4. Legal action
If you are stuck in a deadlocked dispute with your business partner, sometimes aggressive litigation is necessary to resolve the issue. Disputes over significant business decisions, allocation of authority, cash flow shortages or breaches of contract are common reasons a partnership dispute may end up in court.
Business litigation is often complicated, time-consuming and costly for businesses. For this reason, pursuing legal action is typically the last resort option for settling business disputes.
