Starting a business as a partnership can be highly beneficial for all parties involved. Unfortunately, there are also some potential pitfalls. Some of these negative situations are so detrimental, they could place the business at risk of failure, extreme financial loss, or litigation. Then there are situations that can place partners at risk for bankruptcy and/or criminal penalties. Learn how effective planning can reduce your risk of such negative effects in your business venture.
The Why and How of Partnership Conflicts
Partners often start out as family members, friends, or colleagues who share a passion or idea. Fueled by little more than hopes and dreams, they may fail to consider that it takes more than passion to succeed in the business world. They may not examine aspects like differing work ethics, money management, or leadership styles. This lack of consideration and communication can ultimately lead to anger, frustration, and unmet expectations.
When tempers start to flare, or when one party deceives another or fails to follow through with their duties as a partner, it places the business at risk. Say, for example, one partner is responsible for bookkeeping, but fails to do so effectively. Tax issues may eventually ensue, which can create stress and money issues for all partners. Some cases may be so extreme that it could result in a complete loss for the company.
Protecting Yourself from Failed Business Ventures
Business ventures are, in general, a risk. Economy, the want or need for a service or product, and numerous other factors are all variables that may be difficult to plan for and predict. Yet there are some ways you can protect yourself from failed business ventures – namely, you can vet your decision to start a partnership, and whom you plan to partner with. For example, you may want to consider:
- If the professional skills of partners complement one another;
- If you trust your partner’s character and personal motivation;
- If there are any areas that could lead to contention (i.e. a partner who fails to stay organized or follow through with aspects of their personal life);
- How you will respond if a partner behaves in a way that is unethical; and
- What you might do if the partner decides they want to move out of the country or state.
How Our Illinois Business Law Attorney Can Help
Because there are so many aspects to consider, and because failure to do so can have serious consequences, it is critical that you first discuss your business venture and partnership with an experienced Schaumburg, IL business law attorney. Dedicated and experienced, Miller Law Firm, P.C. can help. Schedule your personalized consultation by calling us at 847-995-1205 today.