Small businesses and service businesses like law firms are all about people and relationships. If the relationships go bad, a business breakup can be just as difficult and costly as ending a marriage. Business partners and colleagues invest a great deal in the relationship and there are usually significant assets involved. The collateral damage to your employees and their families can add to the tragedy.
Despite the potential for costly business litigation, many business partners still fail to plan ahead. Perhaps, as in marriage, people never want to enter into a business relationship thinking that it is doomed to fail. Yet statistically, the success rate for new business ventures is less than 50%; and, since 2008 the success rate for new law firms is lower.
Even long after businesses are launched and become successful, healthy business relationships encounter difficulties along the way. Like a marriage, maintaining a good relationship with your colleagues requires effort. Here are five things to consider that might help you avoid a messy business breakup:
1. Check Your Emotions. As with any type of dispute, it is important to keep your emotions under control. Because owners often invest significant time and money into the business, it is easy to become angry and frustrated when things aren’t going as planned. However, emotions can often cloud your judgment and get in the way of a solution. If some cases, both partners may need to step away from the situation in order to see the bigger picture.
2. Address the Problem Directly. While minor issues may resolve themselves in time, major issues generally head in the other direction. If left to fester, they can ultimately lead to the demise of the business. Therefore, it is imperative to address disputes quickly and openly.
3. Make a Plan Before Disputes Arise. Having a plan in place to deal with disagreements is the best way to avoid litigation. For instance, a partnership buy-sell agreement serves much like a pre-nuptial agreement. It outlines what happens when a partner wants to leave the business. In addition, it can also address a myriad of other changes, like the death, incapacitation, or retirement of a partner.
4. Consider Your Options. For business owners experiencing a bump in the road, it is important to thoroughly evaluate whether the relationship can be saved. For instance, have you encountered a temporary speed bump or is this really the end of the road?
5. Seek Assistance. In many cases, the dispute cannot be resolved without the assistance of a business attorney or neutral arbitrator. It is important to know when to ask for help. Often, business partners seek assistance too late in the process and are unable to avoid the cost and expense of protracted business litigation.