Business partnerships form when like-minded people come together to achieve similar goals. The arrangement can be beneficial for years or decades but can also take a negative turn.
These are five circumstances leading to a business divorce.
1. A partner’s ambivalence
Many people enter into business partnerships to compensate for the skills or resources they lack. For example, you may excel at handling face-to-face client interactions but rely upon your partner’s accounting skills. If either partner loses motivation or can not focus on an essential role, the foundation of the partnership is at risk.
2. Changing goals
Significant success can inspire one partner’s desire for additional locations or offerings that another partner considers risky. Partners who do not whole-heartedly agree about a core business change may experience underlying conflict making a partnership dissolution inevitable.
Partners rely upon each other’s integrity and honesty to develop a healthy business that promotes their long-term interests. A secretive partner who lies or distorts information can cost you time and money and compromise your reputation. A partner’s stealing, tax fraud and document falsification are major transgressions warranting an immediate partnership dissolution.
4. Conflicting priorities
Sometimes a partnership ends because one partner undergoes a life circumstance making its continuation unfeasible. For example, illness can leave one partner physically unable to perform vital duties, or a spouse’s job transfer could require relocation out of New Jersey, reducing a partner’s accessibility.
5. Declining revenue
When a business’s costs exceed its gains due to a poor economy, diminishing market or other circumstances, it can become a financial drain despite its partners’ best efforts. A partnership dissolution may be the only viable option to mitigate losses.
Whether you seek full ownership of your business or dissolve it entirely, an amicable partnership dissolution benefits everyone.