Chapter 2: Disagreements
The Importance of Strong Business Partnerships
The foundation of many successful businesses is a strong partnership. When partners work together with a shared vision and value system, it can feel like nothing could ever go wrong. However, the reality of running a business often involves a range of stressful situations that can challenge even the most solid partnerships. Inevitably, disagreements will arise — and if not managed properly, they can lead to the unexpected collapse of a jointly-owned business. Business disagreement resolution is crucial in maintaining these partnerships.
The 5Ds: Key Risks to Business Partnerships
As we’ve mentioned before, according to the Small Business Administration, 50% of businesses fail because of unintended consequences. These unintended consequences can include Divorce, Death, Disagreement, Distress, and Disability, also known as the 5Ds. At Richard Brothers, we help businesses mitigate the risks associated with the 5Ds. We have a team of Certified Exit Planning Advisors (CEPA ®) who guide businesses to prepare for the unexpected as well as outline the best options for succession. On our blog over the next few months, we will explore the impact the 5Ds can have on your business and the resources available to prepare yourself. In this article, we discuss the second D – Disagreement. Business disagreement resolution is essential to prevent unnecessary disruptions.
Real-Life Example: The Impact of Disagreement
Let’s explore the impact a disagreement can have on a business through a real-life example. A firm had a leadership team consisting of one managing partner, aged 70, and four minority partners, aged 60 to 65. Together, they had successfully built the business into a firm with 35 employees. On his 70th birthday, the managing partner announced plans to retire and expected the minority partners to buy him out at a fair market price.
The four minority partners quickly realized they disagreed on how to proceed. As they neared retirement themselves, each partner feared losing their business equity and financial security with the managing partner’s exit. To develop a comprehensive exit strategy, they had to first clarify their individual goals and expectations. A thorough business disagreement resolution plan was necessary to move forward.
Finding a Solution Through Professional Guidance
Building on their long term, trusting relationship, the partners brought in advisors to help outline a solid course of action. The managing partner chose to delay his exit, giving the group time to find a solution that met everyone’s needs. Partnering with a mergers and acquisitions (M&A) firm, they identified a larger company with the right resources, culture, and structure to offer each partner a preferred exit path. As part of the deal, the younger partners agreed to stay on for a period of time to help manage the transition for clients and the new leadership. Today, all the partners are enjoying their retirement and the firm they created continues as part of a larger company. Professional guidance can make business disagreement resolution more effective.
How to Resolve Disagreements and Protect Your Business
This highlights how a business disagreement can be addressed, leading to a resolution that satisfies everyone involved. It is also an example of partners working with the appropriate professionals to find a way to move past initial disagreements and align with a common goal. We worked closely with the group of partners in this example to help them communicate their individual wishes so we could then create that common goal for them to work towards. Achieving this can be tough, particularly when emotions flare or communication fails. What will you do if your business partner won’t listen to your fears or your wishes for the future? What if you and your partner can’t find a way to agree on the next steps for your business?
Disagreement between partners can shut down communication and hurt the business, and even result in closure. Fortunately, business owners can tackle disputes head-on, safeguarding the business and all partners involved. Business disagreement resolution is not always a bad thing; it can also provide opportunities for creativity and deeper communication.
Three Tips for Working Through Disagreements
Here are a three tips for working through a disagreement partner:
- Define the problem. Start by aligning everyone on the key business issue that needs resolution.
- Establish measurable goals. Learning what outcome each partner is looking for can help define metrics that both parties can agree on working towards.
- Work with our Certified Exit Planning Advisors (CEPA®). Having professionals involved can help communication stay on track while you work on common goals.
Are you doing everything you can to protect your business? The team at Richard Brothers Financial Advisors is equipped to spot and evaluate business risks head-on, from financial threats to internal disagreements. Contact us today to have a confidential conversation with our CEPA® team and ensure the continuity of everything you’ve built. Effective business disagreement resolution can secure the future of your business.
