5 Reasons Why Business Partnerships Fail
If you’re considering going into business with a friend or a professional colleague, you’re probably excited about what lies ahead. While it’s good to be optimistic, it’s also good to proceed with caution. Here are five reasons why business partnerships fail.
1. One Partner Has A Larger Stake Than The Other
Oftentimes, business partners do not start their enterprise with the same amount of money. One might be the idea person who’s full of wonderful plans and insight, while the other is the money person who has the cash the make their partner’s ideas happen. One partner investing more of their own money into the organization isn’t always a recipe for disaster. However, it can lead to resentment, especially if the business doesn’t become successful and they don’t see a return on their investment.
2. The Lines of Friendship and Business Are Blurred
It should come as no surprise to anyone that many business partners started out as friends. Being friends outside of the business can sometimes actually be helpful to the success of the organization. But in other cases, the lines between the friendship and the professional relationship become blurred in a bad way, where one person begins taking business decisions personally instead of seeing them for what they are.
3. One Partner Wants To Be The Star
A lot of people are perfectly cut out for sharing the spotlight. However, some people are better suited to being the solo stars of the show. Sometimes business relationships fail because one partner was reluctant to share the credit and success of the organization. If you suspect that an individual might be more in it for themselves than a team player, it’s best not to proceed in a business partnership.
4. The Work Isn’t Divided Equally
No one wants to feel like they’re doing all the work while their partner or teammate coasts by. It’s why so many of us hated group assignments in college; it always felt like one or two people were doing the lion’s share of the work while everyone else partied. If you’re going to start a business with someone, be confident that they are willing to split the work down the middle. If you suspect that your prospective partner might be lazy, it might not be a good idea to develop a professional partnership with them.
5. The Idea Was Better In Theory
Business partnerships don’t always fail because of a conflict between the two partners. Sometimes they fail because the business itself just isn’t working. Many business partnerships are the result of two people coming up with a great idea and wanting to take it further. However, sometimes an idea sounds better in theory than it actually is in execution. For example, friends who come together to develop an app might have a great working relationship, but the app itself just isn’t unique enough to turn a profit. In these scenarios, it’s often possible for the partners to wipe the slate clean and try again with a new idea.
This list isn’t meant to discourage any up and coming entrepreneurs who are entering into a business relationship. Instead, consider it a word of caution. It’s better to consider the worst case scenarios than it is to simply go in blind.