Top 7 Business Partner Problems
While partnership agreement provides several benefits and advantages, entrepreneurs should consider the top 7 business partner problems associated with running a company in such business arrangement.
Partnership is a business arrangement which provides several advantages because the partners can help each other in managing a company. However, such arrangement also has its own disadvantages.
These are the top 7 business partner problems:
It is usually hard to find partners who share the same vision
Finding a partner is much harder than a dating game because a person should find someone who will share his vision, work ethics, and commitment in order to sustain their business relationship.
Partners may have unequal commitment in running a business
A dispute may arise if partners have unequal commitment to their company. For example, Partner A dedicates more time and effort to expand the business while Partner B is not taking his responsibility seriously.
Partners may have conflicting visions and goals for their company
While conflicting opinions and visions are unavoidable in partnership agreement, the problem will arise if the partners are aggressively pushing their opinions with total disregard of the other partners. And if this thing continues, resentment may arise that can affect the business operation.
Personal disputes may arise
Personal disputes are problems which must be avoided at all cost since these can jeopardize the company’s growth. To prevent such problem, a business should be treated as a different entity from one’s personal life.
For example, siblings who are running a company should not allow family issues affect their professional relationship and the business operation.
Partners are liable for business debts
Like in sole proprietorship, partnership agreement will make each partner liable for business debts and other financial responsibility which means that they have to liquidate their personal assets such as houses and cars if their business can no longer pay its debt.
To protect the personal assets and limit their financial liability, some partners have followed a business arrangement called limited liability company (LLC).
An individual’s decision can affect his other partners
In most cases, a partner’s financial debt, actions, and decisions affect his other business partners. With this, it would be important to consult with other partners to avoid any disputes.
One of the partners is terminated, resigned, or died
If a partner is not doing his job in running a business, his other partners may be forced to terminate him. However, this is not easy since there is a legal ramification for terminating a partner.
To prevent any legal loophole, it is important to create a contract that will include provisions on termination, resignation, and death of a partner.
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