Handling Partnership Disputes in a Family Business4

Battling a business partner is never easy, but it’s even more challenging when that partner is your sibling, spouse or parent. Family-owned businesses are fairly common. In fact, SCORE estimates that family-owned businesses employ 60 percent of the U.S. workforce and create 78 percent of all new jobs in the country. Conflict in a business is inevitable, though, whether that conflict is with someone related to you or not.

Fortunately, there are some protocols you can put in place to prevent and resolve conflicts without going to court. Here are a few tips to try before seeking legal help.

Have Policies in Place

If you haven’t already, put protocols in place for managing disagreements. Is there a third-party arbitrator who can help when you can’t come to a consensus? Have a written document that states exactly what will happen if you can’t agree on something. You should also outline how things will be handled if you someday decide you can no longer work together. How will the business be split? Who will take over, if you choose to keep it going?

Leave Baggage at Home

Unlike unrelated professionals who come together to run a business, families bring baggage. There’s a personal history that can easily cloud day-to-day operations. It’s important to learn to separate those personal issues with the professional duties related to running a business. But no matter how hard you work to set the personal conflicts aside, you’ll find that sometimes they’ll creep in. If you recognize them for what they are, you may be able to keep them from interfering with daily operations.

Seek Legal Help

If internal mediation doesn’t work, it may be time to contact an attorney. This doesn’t mean anyone’s filing a lawsuit. In fact, legal counsel can help you draft up contracts to protect your business. An attorney can also set up a mediator who can work with all owners to come to a resolution. This service can often come with a nominal fee, which will be well worth it if it leads to a workable compromise. You also should consider tough issues like who will take over the family business when elder owners retire. You should make these decisions well in advance of that retirement, and legal contracts can help put enforceable paperwork in place.

Running a business with family can be a fun bonding experience, as long as you have methods in place to avoid and resolve conflicts. If you do need legal help resolving those disputes, a mediator can help serve as that objective third party you need without ever having to go to court.

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