At the beginning of a business partnership, partners often have a rosy view of the future. Cooperating to start and grow the venture is not usually difficult at this stage, as partners often have similar goals for the business. Eventually, though, friction may boil to the surface.
Certain disputes are often inevitable in business partnerships. Still, if conflict gets out of control, the partnership may be unable to meet customer demands. Business partners may also be miserable if they cannot keep conflict in check. Here are three foundational ways to minimize partnership disputes.
1. Seek legal counsel early
The partnership or operational agreement and other foundational documents provide a framework for how the partnership operates. Regardless of the nature or size of the venture, it is important to seek legal counsel when drafting these agreements.
After all, an experienced attorney can likely address potential areas of conflict before they become a problem for the partnership.
2. Include a dispute resolution procedure
Even with comprehensive and tight partnership agreements, disputes may eventually arise. By including a dispute resolution procedure, such as mandatory mediation, all partners understand exactly how to resolve conflict.
Furthermore, if each partner has a say in the language of the dispute resolution procedure, there may be a better chance of having all partners respect it.
3. Consider a buyout agreement
Eventually, the interests and desires of partners may diverge. For the partnership to survive, it may be critical for the partnership agreement to have a buyout provision. This provision simply indicates how partners may buy out a partner’s interest or force him or her out of the partnership.
Ultimately, by formalizing when and how a partner leaves the partnership, the remaining partners can refocus on growing the venture without conflict.