6 Signs Your Business Partnership Will Fail: Cumulative Money Problems

November 2, 2013 | By | Reply More

money problems

Conflicts over money or money problems are very high on the list of reasons that 70% of business partnerships fail. I’m not referring necessarily to lack of money. The damage to business partnerships stem from the fact that each of us have different attitudes about money and therefore handle it in different ways.

The most hopeful scenario is that differences have been discussed openly at the outset of the partnership and are continually a topic reviewed with level heads.

Most often that is not the case. Here is a sample list of the types of problems businesses run into around money where partners can have very opposing views:

  • financial risk taking
  • collections investment of profits
  • family involvement on acquisitions
  • under-capitalization/ involving outside investors
  • perceived inequality in remuneration of each partner based on each one’s view of each other’s work and responsibility
  • hiring and salaries of employees investments in outside experts to train, coach, market, etc.

The money issues in business that accumulate over the course of time are based on many factors, some personal, some internal to the business and some on outside forces beyond anyone’s control.

Bill and Vincent were investing in a new business. Vincent was unemployed with limited funds, so at the outset Bill did the financing. There was growing tension between them because of this. Bill felt he had more right to make decisions. He also had a subtle way of belittling Vincent because of it. How could such interaction be a good basis for a new business?

They were wise enough to seek coaching, during which I helped Vincent spell out the behavior that was not obvious to Bill. Vincent on his own was too uncomfortable to communicate clearly how he was feeling. When it was out in the open in our coaching sessions they were able to make some changes so Vincent was able to contribute more in ways that made him feel respected. They also set some goals and deadlines for adjustments in the financial contributions.

Open communication in this scenario prevented problems from escalating into major conflict which could have ultimately ended the partnership.

Partnership agreements can go a long way to spell out how money decisions will be made. However, partnership agreements are not very efficient in predicting how personalities will react in various unforeseen situations and crises.

Protect your partnership as much as possible. Choose your partner wisely. Choose your business wisely. Engage a coach early in the process.

Here are some of the ways it will pay a high return on your investment:

  • make sure partners are on the same page and well suited
  • discuss important issues unique to you for the partnership agreement
  • improve communication and as a result focus on the smooth functioning of the business instead of on personality issues
  • better and more efficient decision making and problem solving
  • greater commitment to the end result and less time wasted in disagreements and problems
  • more pleasant atmosphere carried over to employees, clients, vendors and devoted employees
  • better service resulting in increased bottom line


NEXT: Control Issues

Read Other Articles in the Series 6 Signs Your Business Partnership Will Fail


About the Author:

Dorene Lehavi, Ph.D. is principal of Next Level Business and Professional Coaching. She coaches Professionals and Business Partners and teaches teleclasses on techniques to break through barriers to the next level. Dr. Lehavi offers a complimentary coaching session so you can experience how coaching can work for you. Contact Dr. Lehavi at Dorene@CoachingforYourNextLevel.com or on the web at Http://www.CoachingforYourNextLevel.com

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Category: Strategic Alliances

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