Choosing the right business structure is imperative to the success of your business. Not only will it dictate the amount of liability exposure that you’ll experience and how taxation will occur, but it’ll also control how much power you’ll retain over business decisions and your business’s overall direction. That’s why many Georgia entrepreneurs choose a partnership when creating their business. When properly put in place, this structure can give you a lot of control over your business operations, increase your take home pay, and limit your personal liability to a certain extent.
Yet, as with every business structure type, there are risks associated with a partnership. One of them is coming into conflict with the other partners. When these partnership disputes are mishandled, your operations can crumble, and the business may wind up dissolving. Therefore, if you want to protect your business interests as much as possible, then you should think through what you can do to avoid what could otherwise be a disastrous disagreement.
Tips for avoiding partnership disputes
There are several strategies you can utilize to address a partnership dispute. But the hope is that you can avoid these disagreements from the get-go. It’s inevitable that you and your partners will disagree on certain points, but by implementing the following tips, you’ll hopefully prevent them from becoming so problematic that they shake the core foundation of your business:
- Draft a crystal-clear partnership agreement: Through a partnership agreement, you can specify each partner’s obligations. This clearly defines each individual’s role, which can prevent certain disputes from arising since it’ll be clear where accountability for certain responsibilities lands.
- Stay in communication: To avoid a partnership dispute, you need to keep open lines of communication. That way you each know how the others are operating and where tension among business strategies lie. This gives you an opportunity to try to hash out those disagreements before they fester into something that’s unmanageable.
- Discuss worst-case scenarios: When you start a partnership, you really should hope for the best but prepare for the worst. By discussing difficult situations that could arise in your business operations, you and your partners can align on certain approaches and iron out any disagreements before such problems actually exist. Taking this approach will provide consistency and peace of mind since you’ll know how your partners will respond in certain situations and how you’ll act as a team to address them.
- Use a decision matrix: This tool helps partners come to unbiased decisions that are based on the facts at hand rather than emotions. You can create an agreeable decision matrix early on in your business’s formation so that everyone knows its purpose before challenging issues arise.
- Use dispute resolution: While you should try to talk out any issues with your partners when they first arise, if that’s unsuccessful then you should consider alternative dispute resolution. A mediator, for example, can help you and your partners frame your positions and find mutually agreeable resolution. This is a great way to find a positive outcome without letting emotions getting in the way.
Develop a partnership that protects your long-term interests
There’s a lot that goes into the formation of a successful business. And you have to appropriately address each issue, otherwise you could find yourself at a disadvantage when unexpected or contentious issues arise. That’s why now is the time to put in the legal legwork to protect your interests. If you’d like to learn more about how to do that, then now is the time to discuss the matter with your attorney.
