Partnership for the Good of Your Business

Common types of business ownership partner disputes

On Behalf of | Jun 14, 2024 | Business Litigation |

Starting a business with a partner can be an exciting adventure. However, it can also bring challenges, especially when disagreements arise.

Understanding common types of these disputes may help keep the business running smoothly.

Financial disagreements

Financial issues are a major source of conflict among business partners. Disputes often occur over how to allocate profits, handle expenses and invest in the company. One partner might feel that the other is spending too much on unneeded items or not investing enough back into the business.

Problems with the division of responsibilities

Conflicts can also happen over the division of responsibilities. Each partner could have different ideas about their roles in the business.

One partner might feel they are doing more work than the other, leading to resentment. To help prevent this, partners should define their roles clearly from the beginning.

Decision-making issues

Decision-making authority is another common area of dispute. Partners may have different visions for the company’s future or disagree on day-to-day decisions. Without a clear decision-making process, these disagreements can stall progress and create tension.

Exit strategy disputes

Partners often overlook the need for an exit strategy when starting their business. However, issues can arise when one partner wants to leave the business or if there are plans for selling or dissolving the company. Without a clear exit strategy, these situations can lead to confusion and conflict.

Conflicts of interest

Conflicts of interest happen when partners focus on activities that help themselves at the expense of the business. For example, a partner might start a competing business or side job that takes up a lot of their time. Talking honestly and setting clear policies about outside activities is important.

Business ownership partner disputes can take many forms and slow down daily activities. By addressing these problems proactively, partners can maintain a healthy and productive business relationship.

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