Why business partnerships fail so often

Discussion in 'Growing and Managing a Business' started by Damien Lee, Jun 22, 2015.

  1. Damien Lee

    Damien Lee
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    Running a business is tough enough as it is. It's not surprising why many prefer to go into business with a partner in order to share the risk and workload. Unfortunately many partnerships have been proven to be unsustainable as they often run into countless of problems. I've never engaged in a partnership but I've seen others that have tried and failed.

    From witnessing these failed partnerships I've reached several conclusions. The biggest issue is that the partners have each got a totally different vision for the business. In such cases, there is no true solidarity and the partners eventually turn on each other at the first sign of trouble. Another huge problem is that one of the partners will often not come through on their commitments. Either they will not work as hard as promised or they won't come up with any latent capital that was originally agreed upon.

    As a general rule of thumb, it's best to avoid business partnerships. While there are successful examples out there, they are often in the minority.

    Have you had any experience with a business partnership?
     
  2. Corzhens

    Corzhens
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    My husband had a business with his best friend in 1993. It was going smoothly for some years when he discovered that his best friend had organized his own company and pirated all their big clients. That's a neat lesson in business partnership. We never imagined that his best friend since high school days would that to him just for the money.
     
  3. asbrown

    asbrown
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    Corzens touches an important point. A lot times people go into a partnership with friends or family, and usually begin very positively. That can lead to neglect of putting the proper agreements and legal framework in place. For good or for ill the business world doesn't run on trust, and if you want to make sure you stay friends with the person you started the business with, it is important to fully map out how the partnership will work.
     
  4. NicCris

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    When you go into a partnership with another party, set your expectations for what success will look like upfront. Both partners can be completely committed to success, willing to grind out the tough times together, have complimentary skill sets, and still end up failing. With partnerships, you generally want both parties to get something out of the deal. But when someone calls you out or places blame on you, it is natural for you to argue and fight back. Unfortunately, that's the beginning of the end...
     
  5. Dajdajnemoj

    Dajdajnemoj
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    Dear all, I am new to the forum so I am not sure if this is the right thread to post in, if not, please take my apologies :)

    I recently parted ways with my ex employer and decided to start my own business. I was soon approached by a supplier that I often contracted while working in my old company. She had a similar idea, only she had some accounts that want to spread the business to areas she has no experience with and which happen to be my specialty. We talked about opening a company together that would cover this area of business, I have the know-how and she has the buyers. We started working on some points already, but nothing official yet. Also, I should mention that our business relationship in past few years was always good and we even became friends. During our meetings it became clear that we seem to share the vision and enthusiasm.

    However, very often this person is hard to reach (by phone, mail...etc) it seems that she has a lot of other responsabilities and/or has problem prioritizing. This has intensified in the last one month and I am begining to question her dedication to the project.

    On the other hand, today I had a conversation with an old friend and ex-colleague who has been talking me into starting a business together for years. Today again, she insisted that we should do something together.

    My biggest concern is "What's in it for me?". The person I first described has business and contacts, and she is the kind of person/professional that excells at everything she does, very capable but easily distracted. The other person doesn't have buyers nor contacts, but is very consistent and I believe has good management skills.

    Is it wiser to go with the person who has contacts and ready business (knowing that I will have to invest extra energy in order to keep her on track) or the person who's not bringing anything into the deal but is a strongwilled and focused person? I should add that I trust both of them equally.

    Or, would you advise me to start on my own?

    I would be very grateful for any of your thoughts on this, thank you very much in advance! :)
     
  6. AndreJ

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    Partnership business is not going longtime. But why ? money is broken the partnership business. When business is going well and increase the business sales and traffic. Then broken the friendship and business.
     
  7. manishsqrt

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    Lack of vision, rigidness towards ideas and faith may be some of the reason behind failed business partnership. But after all the core part is value. If a business is not able to generate value then there is a high chance that it will broke. Both sides must be very honest for building up a great partner ship and they should also keep patience and forgiveness in their mind. Final words, both partners must have an experience of running a business and profits and losses. Partnership must be based on experience not on investment or returns.
     
  8. Master

    Master
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    Well IMO you yourself have mentioned many probable reasons of Why a mutual partnership lands into trouble.
    The thing is if any one of the partner looses his or her interest in the business due to any specific reason. Chances are that it would impact business also. TheseTremors would effects the foundation of mutual understanding.
     
  9. kitchie

    kitchie
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    I don't recommend business partnership especially with relatives and friends.. My mom and her sister didn't talk for more than 2 years because of business they shared for only 6 months.
     
  10. AlexTuesday

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    While I haven't had any business deals yet, I have had plenty of lesser contacts fall through due to the other party not following up on their commitment. Finding a person who can match your own dedication to a project is a difficult task, and one that should not be done lightly.
     
  11. dyanmarie25

    dyanmarie25
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    Business partnerships fail due to a lot of reasons. It probably has something to do with lack of communication or misunderstanding. Sometimes, both business partners don't see things eye to eye which could lead to an argument, and the business would suffer eventually. When the two of you have different business goals, I think it will never work out.
     
  12. david14beck

    david14beck
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    May be this is because business partner depends on each other, they think other person will take care of it. there will be other reasons like lack of communication with each other, misunderstanding. but if you divide your work in different ways, then probably it will help you out.
     
  13. jannie carter

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    Not all partnership business fails. there are few business that started as partnership business are now big organizations listed e.g. "Google.com"
    Now coming to your point, the biggest reason for partnership failure is the loss of trust, confusion and incapability to facing the downfall.
     
  14. JBMedia

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    It's truly hard to find good partners for a partnership company anymore. It doesn't help that you have to always be on your toes wondering if your partners going to screw you over or not. That's why I think it's a good thing to have your partner a friend, if possible, that shares the same values and interests as you. There will always be hard bumps in the road, but keep in mind, if you lay out ground rules in the beginning, such as "business is business" and "business and friendship are separate" type of things, it should make it a little more smoother of a ride.
     
  15. rf-harris

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    It usually fails because the lack of trust in between partners. If all partners work together and believe in each other then there is every chance that most of the business partnerships wouldn't fail.
     

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