Among small businesses in the United States, business partnerships are the second most popular ownership structure—second only to sole proprietorships. It’s easy to understand why. Going into business with a partner can offer several advantages over going it alone. With more than one owner, you may have twice the initial capital investment to work with, and your business could benefit from a partner’s complementary skills.
However, sharing business decisions with another person isn’t always smooth sailing—especially when the partners’ skills and time commitment aren’t equitable. While a correctly drafted business partnership agreement can help avoid or resolve many disputes, some personality clashes are almost destined for failure.
Common business partnership personality clashes
The spender vs. the saver
Money is a common source of partnership disagreements, often because people fall into one of two categories: spenders and savers. Spenders may live by the popular saying “You have to spend money to make money.” They don’t worry too much about cash flow and might make hasty spending decisions that they regret later. They may even enter the business partnership with a credit score that can make it hard to qualify for business loans.
On the other hand, savers are always worried there won’t be enough money down the road. They have a hard time spending money, even when or purchasing a new piece of equipment could be beneficial—or even necessary—to business success.
Spenders and savers tend to clash as business partners because the spender wants to pursue aggressive growth strategies. Meanwhile, the saver prefers to get on solid financial footing first, even if that means it will take years for the company to deliver a return on investment to the partners.
The compromise: If possible, make sure your partnership agreement details who has the ultimate authority to make spending decisions and how those decisions should be made. If your business partnership agreement doesn’t address such decisions, communication is key. Talking about business decisions and framing them as investments rather than spending can help spenders and savers achieve balance in their partnership.
The creator vs. the critic
Creativity can take your business to the next level. Innovative products and services can differentiate your company from the competition and keep your business profitable and relevant. Thinking creatively about your core processes can help you save time, money, and other resources and give you a competitive advantage.
Sometimes it’s helpful for one partner to be the creator and the other partner to be the critic. Like the relationship between an author and an editor, constructive criticism can help the creator bring out their best work. Rarely is the first idea or iteration perfect, and the only way to improve something is to identify and correct its flaws.
However, too much criticism can stunt the creative process. When feedback becomes personal, tears down ideas, or is too ambiguous, it is actually more destructive than constructive.
The compromise: If your business partnership is suffering due to a creator versus critic dynamic, both partners may need to work toward a middle ground. The creator needs to be open to receiving feedback and recognize that the partner offering criticism is doing so because they want to improve on the idea—not tear the creator down.
The critic needs to be specific with their feedback and offer suggestions. For example, telling your partner, “This design is terrible” isn’t constructive. Saying, “I’m not really excited about the color. Can we try it in green instead?” is specific and allows productive discussion to take place.
The workhorse vs. the slacker
Sometimes each partners’ skills are in balance, but their work ethic isn’t. If one partner is putting in 15-hour workdays while the other stops by once a week for a brief check-in, that’s not really a partnership. Splitting profits but not workloads equally inevitably leads to disagreements.
Especially when you’re first starting out, partners need to decide how to split responsibilities. This can include things like accounting, hiring and managing employees and independent contractors, marketing and business development, and more.
If one partner doesn’t have the time or energy to devote to the business, perhaps they’re better suited to being a silent partner—someone who invests money in the business but doesn’t make decisions, oversee finances or strategy, or attend to the day-to-day management of the business.
The compromise: Make sure your partnership agreement lays out specific responsibilities or discuss them in advance of big events, such as an expansion or holiday season. That way there’s no question about the division of labor.
Remember that sometimes what seems like an imbalance is simply perception rather than reality. Checking in with each other frequently to provide updates on what each of you contributes to the company's growth can often stop fights before they start.
If one partner truly isn’t putting equal time into the business, maybe they’re simply spread too thin. Consider revising your partnership agreement to split profits 80/20, 70/30, or another profit-sharing ratio that’s more representative of each partner's time and effort in the business.
More articles from AllBusiness.com:
- 5 Questions All Entrepreneurs Should Ask Themselves Before Entering Into a Partnership
- 5 Reasons Why Sales Managers Must Learn to Recognize Personality Types
- The Pros and Cons of a General Partnership
- 5 Benefits of Outsourcing Your Content Development
- Managing a Staff that Does Not Get Along
The planner vs. the improviser
The planner likes to have a concrete direction for the business. They believe in annual business planning, quarterly reviews, and staying the course. The improviser lives for daily execution. They know business moves fast and like to remain agile in order to transform to meet customer needs and take advantage of new opportunities.
These two partner types are often at odds. The planner wants a formal approach that decision makers can use to guide the company, but the improviser recognizes that a three-to-five-year plan may be obsolete by the time it’s finalized. Similarly, the improviser might see a sudden drop in sales as a signal that it’s time to invest in advertising, while the planner may see that as an impulsive response. If the problem is that your sales team is poorly trained rather than a lack of product awareness, then throwing money at advertising won’t lift your sales numbers.
The compromise: It is possible to have a strategic plan for your business while remaining flexible and ready to course correct when needed. This is called agile business planning. Rather than going through an annual planning process, partners meet frequently—typically monthly or quarterly. Strategic planning becomes more of a continual process because partners can quickly review, prioritize, and implement strategic decisions. This allows the business to address problems and opportunities much faster than traditional strategic planning while ensuring the business uses its cash and other resources productively.
Can this business partnership be saved?
In many ways, a business partnership is like a marriage. You and your business partner are joining together to work toward a common goal. To get there, you need hard work, open communication, trust, honesty, and effective conflict resolution.
If you and your business partner are struggling to get on the same page, make sure you have a partnership agreement that spells out roles and responsibilities and addresses how you should respond to conflict or disagreements. Make sure these things are in writing—discussing and agreeing to terms isn’t enough. Don’t skip the formalities, even if your business partner is a friend or family member.
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