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Why do most business partnerships fail?

On Behalf of | Mar 19, 2021 | Business Law

Business partnerships are a very common way for two people to start a new company in Texas and share the risks that come along with doing so. Unfortunately, about 70% of all partnerships that are started end up failing. By understanding the reasoning behind these failures, you can better position your partnership to succeed.

Making partnerships too personal

It can feel safe to go into business with family members or close friends whom you trust. You know that you get along, and you don’t have to work on developing your relationship. However, this type of relationship can make it difficult to have open discussions about difficulties that your company may face like finances, goals, business law issues and other decisions.

Instead of partnering simply based on an existing relationship, you should partner with a person who is bringing their own strengths to the table. You should be able to have a frank discussion with your business partner at any point in time without hesitation. You should be able to clearly know what strengths they bring to the partnership and what strengths you bring to it.

Unequal commitments

Two of the biggest contributions that need to be made to a partnership include financial and personal sacrifices. If one partner makes a larger financial contribution or sacrifices more of their personal time to grow the partnership, it can easily create resentment between business partners. You should avoid partnering up with anyone who is unable to provide an equal level of commitment in regard to both finances and personal time.

Business partnerships can be a great way to attain success in the entrepreneurial world. However, they should only be entered into with the utmost respect. Since the majority of business partnerships fail for the reasons above, it’s important that you and any potential partner prevent your relationship from experiencing similar issues.


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