How to avoid conflict with your business partner » SMEInsider

How to avoid conflict with your business partner

Stefano Maifreni EggcelerateStefano Maifreni is founder and director of business growth expert company Eggcelerate. In this guest post, he explains how setting out some ground rules is essential to maintaining harmonious working relationships and keeping your business on track.

Is your business partner from another planet? It can feel like that sometimes. When companies are growing fast, pressures can bring personal differences to the surface, differences you may never have realised were there, which can become major disagreements. How do prepare for any conflict that may arise, and deal with it in a professional way.

My experience has brought me into contact with many start-ups in different disciplines (strategy, product marketing and business development to name but a few). I’ve also worked at different stages of product development, from the birth of an idea, to testing its commercial viability, to then looking for growth capital to bring it to market on a major scale. I’ve witnessed the rollercoaster of emotions a small business owner will inevitably experience when the company is growing rapidly.

It’s easy for the excitement of setting up a start-up or new product to take over. Targets, finances, campaigns, spreadsheets and the regular business issues are vital. But all this activity can mask significant differences between a company’s co-founders.

It’s crucial not to neglect the personal and emotional side of your business, and to consider how the company’s founders are feeling about how things are going and about each other. After all, will the partnership between partners be strong enough to last the distance?

Let’s explore four key areas where differences can put a strain on working together.

1) Different dreams

What does each of the founders want in five, 10 or 25 years? Is their vision to change the world or simply to get acquired by a large player and then exit with wads of cash for an easier lifestyle?

It’s important to be on the same page from Day 1. Having different business goals will lead to conflict and affect the company’s direction in a serious way, for example, when deciding what to do about a future round of financing.

An outside expert can provide a listening ear, work to create a common objective at the outset, and provide a strong sense of direction and purpose.

2) Different geographies

Is it viable to have a co-founder based in a different city or country to most of the other founders? Your team’s proximity to each other is directly linked to the ability to manage expectations.

The people that live and work in the same place (often the same room!) can meet, discuss and decide what to do – often in a spontaneous way. But their remote colleague can feel more and more excluded from the decision-making process.

It’s as if they have become a ‘virtual’ partner, not a real one. Even with the latest tech offerings, face-to-face communication is always better in this kind of scenario. It’s so easy to misunderstand the tone of an email, isn’t it? Miscommunications can have disruptive effects and erode trust to a degree that it destroys the business.

I’ll be honest: sometimes having a remote partner doesn’t work. But it can succeed with good communications, equal input from everyone, and regular calls. Sometimes decisions need taking quickly, so the remote partner needs to make him or herself easy to contact – or be happy to delegate some decisions. You can’t have it both ways.

3) Different planets!

Often, friends go into business together, which is great! But it can be difficult for everyone to enjoy the same strength of relationship at a professional level.

It’s important to have a structure in place, to define how to make decisions and what to do in case of disagreements. Formulating a shareholders’ agreement at the outset is fundamental. Someone told me once that it’s a document you write when you’re sober and to use when you’re drunk, and I agree.

Think about what can go wrong and add it to the agreement. If things are working you’ll never have to read it again. But if things become challenging, the agreement is essential. I know of co-founders who have an equal share of the company and yet no shareholders’ agreement. They were unable to decide if and how they should bring their start-up to the next level, and lacked the legal ground to unlock this difficult situation either way.

4) Different levels of resilience

If two people always agree, only one is needed; if they always disagree, neither is needed!

Disagreements can drain the life out of people, and your early enthusiasm for the business can ebb away. Companies grind to a halt. How do you keep going during tougher times?

Even in healthy and active working relationships, sooner or later, you disagree and get into conflicts. This is usually amplified by the stress, the workload, the lack of sleep… and is ultimately governed by the level of resilience of each person.

Here is where points 1 to 3 come together. Primarily, you need a deep respect for each other, endless patience and an understanding that the skills, roles, or experience of each person may be different, so should carry weight accordingly. Sometimes a decision is more to do with the other person’s side of the business. Sometimes you just have to ‘let things go’ on some issues, while the other person does the same on points that matter most to you. It’s give and take, which gives you balance. In many ways, this is the sharp end that may decide the fate of any company.

To wrap up, the points above speak for themselves and are worth considering seriously before you take the next step in any new start-up business or offshoot operation.

I would strongly urge anyone in this situation to get outside expertise to set a range of ground rules – from goals to communications. I know it’s often the last thing on people’s minds – and no-one likes to think of worst-case scenarios during those giddy early days of a new venture.

Getting a sympathetic expert to work alongside everyone to agree some helpful ground rules doesn’t have to be a dry, awkward, clinical experience. It’s a good way of thrashing out important details before politics or other problems rear their ugly heads. You could even decide how partners can exit the business gracefully if they wish (which is almost inevitable). Make these agreements while everyone is in a good mood and feeling positive. It could prove to be a motivating experience too, unlocking ideas and goals.

Ground rules will give everyone that added confidence as you move forwards. Over time, they’ll effectively serve as that grounded and sensible voice in the boardroom that everyone can count on for impartial guidance.

Without thinking ahead, that first rush of enthusiasm that got your company started could disappear as quickly as it arrived.

Eggcelerate helps small and medium-sized companies expand. It provides expertise in areas such as strategy, product marketing, business development, selling across Europe or accessing additional funding. The company is based in London and works across Europe. For more details or to arrange a meeting with no obligation on you, visit their website.