Those Who Start the Company Formation Process Together Stay Together

Making the decision to complete the company formation process with a partner is complex. As your business evolves so to will your business relationship. Even if you are able to maintain the original management structure – just you and them – there is a great chance that at some stage you will have a big disagreement over the direction of the company. Like all major relationships, there is a chance that your differences will become irreconcilable, communication will break down and your company will suffer.   So what should you do?
Get to the Root of the Problem
As we saw in yesterday’s post, a breakdown in communication at a partner level can have disastrous and far reaching consequences on a company. Therefore, Matthew Wright of ISG Management Consultancy, states that the most important thing to do if you feel a situation is creating too much friction, is to resolve the dispute before one partner feels the situation is hopeless.
Most disputes arise from conflicting opinion on the future direction of the company both partners formed together. “People change and so do their personal and lifestyle objectives” comments Wright “When partners initially decide to form a company and through the early start up phase, it is likely that they both share the same ambitions for their company. However, in a lot of situations as life changes so does their vision of the company. As a result, there maybe a situation between partners, where one person wants to sell the company and the other wants to continue to put all profits back into the business to facilitate its future growth.”
In many cases, disharmony between founders can be boiled down to one issue; “Should we cash in and sell the business?”
However, disputes are not always about founders changing directions. In a lot of cases, the dispute is rooted in one partner’s frustration at the unequal distribution of work.
It is usually this type of personal issue that partners find difficult to talk about. This kind of communication issue can be exacerbated by the increasing demands of the recession and the day to day growing pains of a small business.
What should you do?
In a perfect world, disputes would be identified actions would be taken to resolve them and things would never get out of control. According to Matthews “Communication is the most important of partnership. The only way to really deal with tension is talking about it and having a platform where each partner can be truly honest.”