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2 reasons business partnerships fall apart

On Behalf of | Oct 6, 2022 | Business Disputes

Running a company on your own is no small feat. At some point in time, you may opt to enlist the help of a business partner. Having the right partner on board gives you an extra pair of hands and it can really help the company go from strength to strength. 

Sadly, things don’t always go that smoothly and disputes may arise. What are some of the more common causes of partnership disputes? 

Being careless with finances 

You’ve invested a lot of money into the company over the years and taken some risks. Fortunately, these have paid off so far but it’s only because you’ve been very careful. Recently, you’ve discovered that your business partner has not been quite as careful. They’ve taken some of the business funds and used them to finance personal lifestyle purchases. Your profits are for paying staff, bills and investing back into the company, not for lavish purchases. Not only is this a potential breach of fiduciary duty from your partner, but it could be a criminal matter. 

Unfair workload divisions

You invested as 50-50 partners. Not only does this mean that you share 50% of the profit, but you’re also supposed to take on 50% of the responsibilities. When one partner is not pulling their weight, it can be infuriating. Ideally, this can be resolved with an amicable discussion but it is often the source of more long-term disputes. 

How can partnership disputes be avoided? 

The best way to avoid partnership disputes is by having binding contracts in place. This ensures that everyone knows where they stand. Having some legal guidance behind you will also provide some stability.