How do you mediate between business partners? Just like couples get counselling, sometimes it’s wise to bring in external help to assist with mediation between business partners.
Most of us have heard of pre-nups for prospective personal partnerships – documents covering who gets what in the event of separation, divorce or death. In business there is a similar document called Partnership or Business Agreements which cover events such as death, disablement and retirement. Addressing these sources of future tensions may save you money in the long term.
Today I’m raising a different type of conflict that occurs in many established business partnerships and a solution that I term an ‘Internup Agreement’. This may or may not be a written agreement that sets out how you will deal with conflict going forward and/or detailing areas of conflict and various solutions to resolve issues arising.
When we establish a business we are full of enthusiasm. It may not be too long into the relationship however when we may feel we are sleeping with the enemy. The first two years in business are referred to as the ‘Honeymoon Period’ after which time cracks can start to appear. We see traits in our business partners we hadn’t noticed before, and, quite frankly, we don’t always like them. In fact, we believe that the traits are not good for business and we resent them. One example might be that we believe our partner is not pulling his/her weight.
The business that was thriving may weaken should these differences not be addressed. Just over half of new businesses fail – only 43.2 percent* survive into their second year. Intervention at this time saves many partnerships from lengthy and costly litigious action, not to mention loss of considerable income.
The following case study is true although the actual players are disguised for privacy purposes:
Hostility had built between two experienced and capable businessmen in an inner city professional practice.
Partner 1, a skilled behind-the-scenes administrator, met most client needs. He ensured smooth running of the back office. He did not bring in sales or close deals because he was not particularly a people-person, though he did spend productive and often long hours at the office.
Partner 2, a sales-oriented professional, was adept at introducing and closing new business though he would often be noticeably absent from the office.
Partner 1 thought that partner 2 was not pulling his weight. Tensions had escalated.
They were advised to seek help from an independent professional with expertise in this field.
This enabled them to air their concerns and by collaborating they avoided a business split that would have caused severe financial hardship and ruin both partners’ credibility. Within the next two years their business revenue increased by 50 percent because they had learned how to combine their individual strengths to better position themselves in their market.
An ‘Internup Agreement’ is powerful because it may save your business by averting future conflicts. Once conflict is resolved it is easier to focus on areas that matter… putting you in a position of power to drive your business to greater success and industry respect.
Don’t become a statistic. Resolve management conflict before the final crisis and avoid tears before bedtime.
(*Some identifying details have been changed for the privacy of the business people involved.)
* Source: ABS Counts of Australian Businesses including entries and exits. 8165.0, Jun 2007-Jun 2011.