Why do many business partner relations fail?

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Why do many business partner relations fail

Why do many business partner relations fail?

Why do many business partner relations fail

Maybe many of you want to start your own online business. Starting a business Alone often sounds scary so many people choose to have a person or several partners to start their business.

Starting a business with known and trusted people can help you feel more calm and confident in starting your business.

Choosing a Business Partner or the right partner is one of the crucial things in starting a business partnership. If you choose the wrong, this can affect your relationship with your business partners. If your business partnership fails, then it will go more detrimental to the failure of your business.

Before we discuss anything that can cause failure in a business partnership, let’s discuss what business Partnership is first.

What is Business Partnership?

A business Partnership or Business Partnership is a legal relationship formed by an agreement between two or more to run a business as a shared owner. Partnerships are businesses with many owners, each of which has invested in this business.

Some partnerships include individuals working in business, while others may include partners who have limited participation and limited liabilities.

Partnership or Partnership, which is distinguished from the corporation, is not a separate entity from individual owners. The partnership income tax is paid by the partnership, but the advantages and disadvantages are divided among partners and are paid by partners, based on their agreement.

Type of partnership or partnership

Before starting a partnership, you need to determine the type of partnership you want. You may have heard the requirements:

General Partnership

Consisting of partners participating in the daily operation of the partnership is who is responsible for debt owners and lawsuits.

Limited partnerships

It has one common partner that manages the business and one or more limited partners who do not participate in partnership operations and those who have no responsibility.

Limited coverage partnership

Similar to limited partnerships, but there may be several general partners.

Type of partner in a partnership

Depending on the type of partnership and hierarchical level partnership, a partnership can have several different types of partners. The article about various types of partners explains the difference between:

General partners and limited partners

Common partners participate in managing partnerships and have obligations for partnership debt. Limited partners invest but do not participate in management.

Equity Partners and Paid Partners

Some partners may be paid as employees, while others only have shares in possession.

Various levels of partners in a partnership

For example, there may be junior and senior partners. This type of partnership may have duties, responsibilities, and level of input and investment requirements.

The reason why most business partnerships failed

Business partnerships have many advantages – they allow employers to combine various SKILL SETS, and also to share costs and startup risks. This makes a business partnership be one of the most common ways to achieve business success.

Unfortunately, even though Business Partnership has many advantages, they can also be a weakness, and statistics show that up to 70 percent of business partnerships ultimately fail.

Note more closely some of the most common reasons why business partnerships are damaged, so you can make any partnership you put into a more successful relationship.

Working with friends or family can be at risk

Many partnerships between couples, family businesses, or friends who experience success. For example, Amazon was founded by Jeff Bezos, his wife Mackenzie, and some of his friends.

In addition, the idea of ​​starting a business with someone you know (or you think you know) close and believe it can be very interesting and sound promising.

However, as often said, choosing business partners is more difficult than choosing a life partner, and many partnerships have failed.

Every successful business partnership must be based on complementary strength, talent, personality, and experience of prospective partners.

A relative or friend needs to have more skills or experiences that make them become potential business partnerships than just only have their relationships with you.

For partnerships between friends or family to be successful, you need to maintain the separation between business and personal relations.

That way, you can do honest discussions, and is it with your business partner about business decisions, goals, finance, and other discussions that can make personal relationships difficult.

Most business partnerships between couples tend to dissolve in case of divorce. Similarly, personal relations between family members or other friends are often very disturbed when a business partnership between family or friends becomes chaotic.

Like business partnerships, it is very important to have a comprehensive partnership agreement, so issues such as financial, division of labor, and so on clearly before starting a business.

Simple hand positions between family members or friends are not enough if your finances and reputation depend on the business.

If done correctly, business partnerships with family or friends can be very useful and produce big profits but partnerships that cannot be able to destroy family relations or destroy friendship permanently.

The commitment that is not the same between partners

As a business actor will say, starting a business requires a large financial and personal commitment. As a single owner, only yourself responsible for the success (or failure) of the business.

In Business Partnership, you depend on other partner contributions, and if they cannot afford or do not want to do the same level of personal or financial sacrifice, it will lead to hatred and conflict in the end.

Partnerships based on one partner make greater financial contributions and other promising partners to take greater responsibility and do more work may make sense in theory, but this is difficult to measure and described in a partnership agreement.

If the partner cannot keep his promise to take greater responsibility and work harder, of course, this will affect the success of your business.

Similarly, it is difficult for members of the partnership to truly dedicate time in business when he has other responsibilities. Someone who has other business interests or small children and partners who also work, for example, may not be fully committed to doing business partnerships.

Uneven contributions among partners may not cause problems if previously understood (and fully articulated in the partnership agreement), but there is a high probability that this could be the beginning of a dispute between partners.

Division of unfair tasks between you and your business partner

You and your business partner are indeed recommended not to do the same in the company, especially when you start. You will not have enough money to hire other people, so you need to focus on solving different problems.

In other words, you need divide and conquer (divide and conquer). For example, maybe your business partners handle products and techniques, and you handle all things related to income. Maybe you can work together in the field of marketing and strategy.

Make sure you determine who will do what you don’t step on each other.

Lack of success

Building a business requires patience and perseverance and so that businesses can be successful, the owner must be prepared to make a long-term commitment. In addition, many businesses are in the cyclical industry and business owners may need to get used to the growth period and fluctuations in slow business income.

Lack of business and/or period decline in income can have a psychological impact on business partners and ultimately cause conflict, especially if the business is a heavy burden on the personal finance of the people involved.

If one or more of the previous partners becomes an employee with a permanent salary (and allowance) they may be tempted to doubt their decision to become an entrepreneur if the business does not immediately succeed or when a business setback occurs.

If each partner in the business does not work together and only thinks of self-benefits will certainly be difficult for the business to be able to succeed and pass through difficult times.

There is no certainty of success in doing business and the advantage of a partnership cannot overcome the lack of preparation or business ideas that are not feasible.

Comprehensive business planning before and after startup, including research on market targets, realistic cash flows, and income projections, and have sufficient debt or equity financing available when needed are all requirements for any business that will develop in the long run.

The difference in value between business partners

Many partnerships are unsuccessful because partners do not have value and/or business goals that are in harmony. Along with business development, differences can be an increasing source of friction.

Although the purpose of personal life should not affect partnerships, the reality is not like that. If your goal is to undergo a relaxed lifestyle while your partner wants to work seven days a week in the office, it will be difficult for you to work with your business partners.

One of you will feel that the others do not carry out their workers, and will ultimately create many problems.

If your life goals are in harmony with your business partner, it will help keep the peace. Before you partner with anyone, make sure you have the same life goals, especially when you have to work.

The way that can be done to ensure this is to meet with prospective business partners and articulate the following:

  • Why do they want to be an entrepreneur?
  • What is their vision for the company?
  • What are their long-term goals?

Want to start a business because you hate your work or you are sure that you can get rich can be a great driving factor but it might also blind you to reality having and running a business. Potential partners, especially those who enter their first business, need to be realistic about business prospects and make their hopes suitable for avoiding disappointment.

Potential partners may disagree with their vision for the company and have very different understanding and plans regarding organizational long-term goals. For example, one partner might see a business just as an alternative way to get a simple life and has no desire to expand in the future, while other partners may have an ambitious expansion plan for this business, including having great staff, opening a satellite office, taking public companies, etc.

To avoid long-term conflicts between partners, the company’s vision must be agreed upon and explained earlier in a vision statement. In addition, part of a business plan must be used to formalize organizational long-term goals.

Not suitable personality

Share risk and have skills that help each other are some of the big advantages of business partnerships, but if the personality of coworkers is not suitable, there is a possibility where your business will experience problems.

Disagreement among partners is indeed very possible, but a very contrasting personality can strengthen differences of opinion and cause conflict.

Interviewing and evaluating prospective partners is a must if you have not met well. Treat such as work interviews – and discuss skills, talents, and experiences, assess their personalities with questions such as:

Are you a risk-taker?

  • Are you very motivated?
  • How do you handle difficult situations such as handling employee problems, customers, and vendors?
  • What is your hope for me and my business?
  • Do you have the patience and perseverance to handle starting and developing a business?

Remember that personality differences can also be an advantage and not a barrier. But with the consideration that you value your partners, appreciate their opinions, and have the same vision for this business.

Business partners don’t trust each other

An honest and open relationship between Business Partners is the foundation of every successful business partnership, so no one destroys the partnership faster than the lack of trust.

With the shared responsibility inherent in business partnerships, illegal or unethical business practices by one partner place all other partnership members at risk.

Even though you can never expect exactly that your partner will always ethically do something, you can reduce this possibility by examining their previous history and reputation, especially people you don’t know:

Do they have other businesses in the past and if so, how are they considered by business partners, suppliers, customers, employees, and others?

  • What is their reputation in the community?
  • Do they have legal difficulties before?
  • Do they have field jobs or marital history?
  • Have they ever bankrupt, having a bad credit rating, or having trouble with tax authorities?
  • Are they willing to agree to a written partnership agreement that describes all-important business aspects?

The possibility is that if the person has a history of stability and ethical behavior, they will make business partners trustworthy.

Less awake emotions

Emotions tend to affect us all. When someone blames you, it’s natural if you argue and fight.

However, you cannot be emotional with your business partner; You must be logical. If something is wrong, retreat one step and see it from an outsider’s point of view. Find out the logical response and take that approach.

At the end of the day, you both will do what you think is best for the company, so it doesn’t need emotion. Emotions will not help you achieve your goals; They will only affect your judgment.


Before you start choosing your business partner’s perspective, it’s a good idea to examine your prospective partners carefully.

Finding the right business partner does take time. Use your time as much as possible to find the right business partners so you will not experience difficulties in the execution of your business.

If you have found a partner that you feel suitable and right, for a comprehensive written partnership agreement. With this agreement, your chances of having a successful long-term business partnership will be greater.

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