Five reasons why business partnerships fail

Jaded entrepreneurs often tout that business partnerships are more difficult to manage than marriage. While around half of all marriages end in divorce, a staggering eight in ten business partners reach a bitter end. Here's how you can keep the friendly flame burning.

Business partnerships and marriage can be surprisingly similar.

Both are life-altering relationships built on common goals, trust and mutual respect, both involve joint finances to an extent, and both require continued work to keep going. 

But the truth is that business partnerships are much harder to sustain than marriage, especially if you have more than one partner at the helm. Here are five main reasons partnerships fail, and what you can do about it.

1. Differing views

Opposites may attract, but if you disagree on fundamental issues, your marriage may be doomed from the start. The same is true of your business relationships.

While differing views can be a great source of inspiration and innovation as you reach a compromise, some business basics can be divisive, such as when you should seek funding and which route to take (the age old debt versus equity debate, for example).

It could also be branding decisions, media partnerships, or sales targets that divide you and your partner, and these cracks can turn into a rift pretty quickly if left unaddressed.

The remedy: long before cementing your partnership, have an honest discussion on what you would consider a business deal-breaker. Is there something that you absolutely oppose?

Be honest and open as early on as you can. If you’re already in a partnership where your differences are becoming painfully obvious, have that discussion now and see if you can reach a compromise.

Remember why you went into business together in the first place and see if you can make it work through small give-and-take negotiations.

2. Money worries

Statistics from the ONS shows that the divorce rate in the UK rises during each recession, dating back to the early 1980s to the more recent 2007 downturn.

Often couples cite financial reasons for their breakup, just as businesses breakup over similar reasons.

A survey by Hitachi Capital Finance revealed that almost a third of small business owners are kept awake at night by money problems, with worries over late payments and unexpected charges at the top of their list of concerns.

Most SMEs are only one bounced cheque or delayed payment away from insolvency, so conflict over managing cash flow may arise in partnerships.

The remedy: keep on top of your cash flow by preparing and maintaining a cash flow forecast. Make sure it’s a priority for all the partners in your business at beginning of each month.

Check in with your accountant well before the end of the tax year to avoid surprises, and rely on business tools like expense management software to automate processes where you can.

Consider invoice financing if you need to tide your business over in the case of late payments.

>Further reading: 21 ways to improve your cash flow

3. Familiarity breeds contempt

This saying is as true today as it was when coined by Aesop millennia ago. A recent study revealed that business owners generally work 13 hours a week morethan the national average.

If you spend more waking hours at work than at home, you easily have more face time with your business partner than your spouse or best friend!

For businesses starting out, passions run high, and the excitement of getting your venture off the ground may mask the smaller personality conflicts or niggles.

Once your business is on a growth path, the quirks you once admired may begin to grate on your nerves.

The remedy: Couples therapist Dr Sonja Benson believes countering this starts with a simple ‘thank you.’

You are less likely to think of your business partner with contempt if you remind yourself to appreciate everything they have done for you and the business.

On those long, arduous days, gratitude may be the last thing on your mind, but choosing to see your partner as a vital resource can shift your attitude to be grateful and positive.

4. All work and no play

After all the hard work of understanding your partner’s needs and wants, in a marriage, the benefits include physical and emotional intimacy, and the promise of something stable to come home to.

In a business partnership, the pot of gold at the end of the rainbow may just be more work.

You may enjoy a friendship, but as your business becomes more successful, the increased expenses, greater responsibility and general workload may grow exponentially, adding a strain to your work relationship.

The remedy: make sure you set aside time for fun, whether it’s a morning breakfast ritual you share, or Friday night drinks.

Remember: your work relationships are crucial, and a a bonding ritual or two between you and your business partner can go a long way to keep your relationship strong.

5. A lack of support

When you face relationship troubles, chances are you have an emotional outlet in the way of friends or family.

Couples counselling is more common today than ever, but this is not the case for business relationships.

Friends and family may not necessarily understand the specific pressures that come from business partnerships, and there are very few therapists that specialise in business fall-outs than there are marriage counsellors.

Additionally, there’s the pressure to keep up appearances when feuding with your partner. The last thing you need is to alarm shareholders, or scare away potential investors who generally suss out the most promising businesses based on the management teams.

The remedy: if you feel like you can’t talk to anyone about the pressures at work, you could consider a personal therapist to vent to.

A business mediator may help in situations that require both of you sorting your differences out for the good of the company.

Ultimately your business success depends wholly on how you and your partner manage each other. Make sure you only go into business with someone you know and trust. With that as a foundation, remember to work constantly to strengthen your relationship, being as honest and open as you can with each other.

Like in marriage, there are no guarantees in a business partnership, but it’s arguably worth the effort.

See also: Joint ventures can make profitable partnerships

Praseeda Nair

Praseeda Nair

Praseeda was Editor for from 2016 to 2018.

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