Statistics show that business partnerships don’t have a great success rate. Up to 70% of these kinds of partnerships ultimately dissolve. Much like any other relationship, this one too relies heavily on good communication, honesty, dedication, respect, and trust.
Every business partnership goes through phases, ups and downs, and numerous challenges that threaten to destabilize it. One of the main traits of a successful business partnership is keeping up with obligations such as taxes. Finding good management in San Diego, CA, provides just that. But what are the main challenges that partners face during their business relationship? Read on.
How do you solve business partnership problems?
If you are planning to start a business with a partner, it’s crucial to minimize the surprise factor once the company is up and running. However, some things may be beyond your control. Different types of personalities or differences of opinion can cause a rift between partners.
1. Managing a business
Your management style may differ from your partner. This doesn’t necessarily have to be a bad thing. One can be strict and task-driven, while the other takes on more of a “laid back” approach.
However, making this balance work requires that the partners are on the same page, regardless of their managerial styles. Disagreements may arise, but if the partners’ personalities mesh well, the relationship will have a positive effect on the business.
2. Lifestyle changes
In the early stages of a new business, the line between work and life outside of it gets blurry. Like all new businesses, getting it off the ground requires time, effort, dedication, and mental strength. Not everyone is up for this type of lifestyle change.
As everyone has their own coping mechanisms, there’s no clear way to handle these types of obstacles except on a case-by-case basis. It’s important that both partners keep an open mind, give each other time and space when necessary, learn to recognize triggering moments, and not interfere until asked or until it becomes necessary (including legal liabilities).
3. Financial and equity issues
One of the most common issues partnerships are faced with is related to equity contribution and overall financial participation in the partnership. Sometimes, one of the partners is just investing in the start of the business and has no interest in its running, while the other partner may have completely different ideas. Therefore, a clear spelling out of the principles and mechanisms of equity and profit-sharing, pay levels and other reimbursements is not only preferable, but necessary for the partnership to run smoothly and bear fruits for all involved in the business.
4. Setting boundaries
Entering into a partnership with a close friend has its pros, but also cons. Sometimes it is quite difficult to separate the business from the personal side. Decisions have to be the result of clear and cool-headed thinking, separate from emotional elements that characterize a friendship. Disagreements may jeopardize both their common business, but their personal friendship as well.
The major advantages of such a business arrangement among friends, on the other hand, are that they know each other’s strengths, can motivate each other and are ready to offer help, encouragement, and support in situations where it’s needed.
5. Commitment levels
The level of commitment of each partner will determine the type of business partnership it will be. It’s crucial that the partners are honest about their intentions and if they’re fully committed. This can prove challenging, especially if the business is developing at a slower pace. Make sure you and your partners are in it for the long haul and avoid the bumps on the road.
Bringing you comprehensive business partnership and tax management services in San Diego, CA, & the vicinity
If you are starting a business with a partner, you should leave no room for surprises. This is where our team comes in. Whether you have a start-up, need bookkeeping or tax management, our diligent and dedicated team of experts is here for you. David York Tax Service is at your disposal in Downtown San Diego and across the region. Give us a call today to schedule an appointment!