These 3 tips can help with mitigating partnership disputes.
Partnership disputes can be costly to a business because they take precious time away from running operations. These 3 tips can help business partners stay on good terms by mitigating partnership disputes.
1.Hire an attorney to draft your partnership agreement.
People often go into business with friends or people they feel that they can trust and sometimes they skip drafting a formal partnership agreement in favor of verbal plans. As soon as a dispute arises, suddenly what may have been said changes and words have different meanings. A formal, written partnership agreement that is drafted by an experienced attorney can help set up the business structure and partner expectations. Then when disputes arise, partners have a contract that outlines the steps for resolving the matters. Each partner should consult with their own attorney in order to review the partnership agreement to ensure that it is balanced and fair to their interests.2.Go over the partnership agreement’s dispute resolution process with each partner or shareholder.Before a dispute arises, partners can review the agreement and discuss the steps to resolving various types of disputes. This can help remind partners to take their personal feelings out of the dispute and to focus on what is best for the business. Different degrees of disputes will require different kinds of resolution processes. A small dispute may be easily resolved with informal communication, while a big dispute may require a neutral third party mediator. If a dispute cannot be remedied, partners should understand the buyout options and what would happen if a non-conforming partner were not willing to depart the business voluntarily.3.Anticipate business growth and expansion and discuss division of workload early.Resentment can grow if one partner feels that they are working more than another while the business takes off. In order to remove the personal feelings from the business, it can help to lay out expectations of who handles what as the business expands. Create a plan that outlines a fair distribution of work among partners as the pace of the business speeds up. Partners may wrongly perceive one another as not doing enough work if there is no written division of tasks to point to.An attorney may sound like a big expense, but consulting with an attorney early on in the process, and keeping them available to answer questions, can greatly reduce business disputes later on.For more information, send us a message.[formidable id="7" title="1"]