Analysis • Advice • Advocacy

Why do business partnerships often fail?

The beginning of a business partnership is often filled with positive feelings: excitement is high, relations are amicable and everyone is moving forward with a shared purpose. Why does this good state so often evaporate after a few months or years? By recognizing why business partnerships so often fail, you can set yours up for success (or decide to take another path altogether.)

Unclear delineation of responsibilities

When people work together toward a common cause, it’s inevitable that some start to feel they are carrying more weight than others. Business partnerships fail for this very reason, but partners can protect against such a circumstance by planning ahead. If possible, assign responsibilities before your partnership launches—and do so in writing.

A vague vision for the future

It may seem as though you and your business partners are on the same page, but you can’t truly know this unless you’ve thoroughly discussed your plans. Consider the following questions:

  • What if your business falls on hard times?
  • What if your business is exceptionally successful?
  • What if someone sues your business?

Business partnerships often fail because the partners only vaguely outlined their plans at the outset. If you do not explore these and other contingencies before establishing your partnership, you may be met by strong and unexpected disagreement when one of these circumstances arises.

Suspicion and distrust

Human relations can degrade under pressure. A small conflict toward the beginning of your venture can slowly grow into serious hard feelings over time, especially if the business is facing struggles. This negativity can give rise to suspicions on the part of one partner that the other is misappropriating funds, self-dealing or engaging in other nefarious conduct. In some cases, these suspicions are even warranted.

When accusations fly, or any serious conflict arises between you and your partners, remember that there comes a time when you must start protecting your own interests. By taking these matters seriously, you may be able to save the partnership or at least free yourself from this entanglement and part ways with your own future intact.