Top reasons business partnerships fail

On Behalf of | Apr 12, 2021 | Uncategorized

With over 2.2 million partnerships throughout Texas and the rest of the United States, a partnership is a very popular business entity to have. However, up to 70% of business partnerships ultimately fail. This is typically due to a number of different factors that you can take a look at below.

Mixing personal relationships

One of the most common reasons for business litigation at the end of a partnership is there was a mixing of personal relationships with business. It can be very easy to start a business with a spouse, close friend or family member. However, when it comes to money, things can change. It’s important to sit down and take each individual person’s strengths into consideration when determining whether or not they be an ideal partner for a business.

Unequal commitment

When it comes to having a successful business, all partners need to feel like everybody is putting in the same amount of commitment. Unfortunately, this isn’t always the case; many business partnerships fail because one person feels as if they’re more committed than the other. A partnership should be structured on the fact that each partner makes individual contributions to the business so that everybody feels as if they’re making an equal commitment.

Changing values

As a business grows and changes, so do its partners. At some point, a partner may have different values than they initially had when the business started. A common problem that partnerships run into is that different partners have separate values and goals that they want for the business. It’s always advisable to sit down at the start of any business partnership and outline the values and goals of the organization so that any questions in the future can be referred back to that initial document.

While business partnerships are a very common entity, they’re also one of the most common to dissolve. The above are just some of the many different reasons why partnerships end up failing. If you feel that your business partnership is no longer working for you, it’s important to hire an attorney to help with the process of business litigation to ensure that you are able to leave the partnership in a financially stable position.