In today's Freedom Friday blog and email newsletter, I want to continue from where we left off in last week's Freedom Friday blog and email newsletter.  Last week I talked about how to successfully leave a business partnership, and one of the issues I brought up was that business partnership disputes are one of the reasons why you might want to leave a business partnership.  In this week's Freedom Friday blog and email newsletter, I want to talk about a related issue, and that's how to avoid business partnership disputes to begin with.  So, in today's Freedom Friday blog and email newsletter, I'm talking about how to avoid business partnership disputes, because often times, these kinds of disputes can be prevented at the beginning of the business partnership relationship.

Here are four (4) ways to avoid business partnership disputes:

1.  Establish Roles and Responsibilities

The first way that you can avoid business partnership disputes is to establish roles and responsibilities of each of the partners (or business co-owners).  These roles and responsibilities should be established in writing which ensures that all partners (or co-owners understand and agree to their designated tasks and obligations.  The document should outline each partner's (or co-owner's) duties, decision-making authority, and expertise.

2.    Create a Partnership Agreement

The second way that you can avoid business partnership disputes is to create a partnership agreement.  If you're actually an LLC, then this should be incorporated into your LLC operating agreement.  Either way, the partnership agreement or operating agreement outline ownership percentages, capital contributions, profit-sharing arrangements, decision-making processes, dispute resolution methods, addition and/or removal of partners (or co-owners), sale of ownership interests, dissolution of partnership, and of course, the roles and responsibilities of each partner or co-owner.

3.    Maintain Open and Transparent Communication

The third way that you can avoid business partnership disputes is to maintain open and transparent communication.  The owners of the business should schedule regular meetings to address any concerns or disagreements, and make sure all the partners or owners are on the same page.  Encouraging open dialogue can also help prevent misunderstandings and resolve conflicts before they become serious issues.

4.    Develop a Dispute Resolution Plan

The fourth way that you can avoid business partnership disputes is to develop a dispute resolution plan, and this should be included in the partnership agreement or if you're an LLC, your operating agreement.  Your partnership agreement or operating agreement should include a dispute resolution provision for mediation and/or arbitration.  Mediation is when a neutral third party facilitates discussions between the partners or owners to help them reach an amicable resolution.  However, arbitration is when a neutral third party hears both sides of the dispute and the arbitrator makes a binding decision.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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