All relationships start (or at least should start) with hope. Entering into a business relationship presents exciting new opportunities to build something impactful and worthwhile. As many of us know, the hope felt at the beginning of a relationship can often go unrealized.
Partnership disputes are not uncommon in the business world. Partners often develop different visions for how the company should proceed and the manner in which important decisions should be made. So, what are some signs partners need to look out for and get ahead of before a potential split?
1. Your Vision or Goals Have Changed
Businesses and corporations evolve over time. The goals you had on day one may not reflect the goals of the business today. This is a natural part of operating a business, but a lack of communication about those evolving goals often leads to partnership disputes.
When is the last time all partners got together and looked at the true long-term goals of the business? Are you focused on short-term goals and not looking big picture as often? Just because one partner believes the goals have changed doesn’t mean another will, and the vision for those changes may not be universal.
2. A Refusal to Take Responsibility
Honesty among partners plays an integral role in the success of the business. When someone makes a mistake, they have to own it so the proper steps can be taken to remedy the issue. If a partner suddenly refuses to take responsibility for problems with the business, especially ones that are blatantly their responsibility, then this should raise some alarms.
A partner who suddenly believes only others should be held accountable is a partner who poses a risk to the integrity of the partnership.
3. A Breach of Fiduciary Duties
Partners must act in the best interests of the organization. This includes using funds and resources as intended and making decisions exclusive of their own benefit. Occasionally, people make selfish decisions, but if this has become a trend and put your business at risk then it may be necessary to move on.
There will generally be legal recourse if a partner has misused company assets for their own personal gain. A failure to keep these in check could put the entire business in jeopardy.
4. The Business Does Not Have Governing Documents
We recently talked about the importance of establishing governing documents for your business. These documents will act as a bible of sorts for how partners should carry themselves and what falls within the policies and best practices. A lack of these documents could be setting the whole business up for failure.
Simply assuming everyone is on the same page without actually getting this in writing puts everyone at risk. Governing documents set firm and clear guidelines for everyone involved. At Pence Law Firm, we can help you establish governing documents that set your partnership up for success. If it’s too late and you are already dealing with a potentially litigious partnership dispute, contact our firm right away.