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updated: 4/14/2013 7:48 AM

Partnerships hard to maintain long-term

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By Joyce E. Russell

Each week, I hear from entrepreneurs who are struggling with "partnership" issues. They go into a business arrangement full of hope for a happy future, but the honeymoon can be short-lived. It is easy to forget that relationships take effort.

According to some research, about 40 percent of partnerships work out. Some of the most common problems I hear about:

Communication. There is no clear structure for working through issues, and no strategies for resolving conflict. A big issue is the use of email when corresponding, especially when problems escalate (which is the absolute worst time to rely on email).

Lack of transparency or dishonesty. Information needs to be shared. Yet often partners withhold information from each other, which leads to trust issues.

Differences over goals. Partners need to talk about what they hope to gain from the business and determine if their goals are similar.

Poor or ambiguous business decisions. This includes ways of making financial decisions or methods for determining compensation.

Ambiguous roles and responsibilities and performance metrics. For example, if one partner is not performing up to par, the other partner is not sure what to do about it.

Differences in priorities. Both for the firm and for what they hope to accomplish.

No exit strategies clearly defined. There are no clearly defined behaviors that would constitute a mandatory termination. It is important to do this in advance so those who leave will continue to speak positively about the firm.

There are ways to avoid these problems. Here are some strategies:

Research. Take a good look at potential partners before asking people to join. Know who you are dealing with. Interview them and people who have worked with them.

Clearly define your vision. Make sure that people who join agree to the vision. Likewise, define the values for the firm and ensure that everyone is in alignment with the values.

Define the parameters of the partnership at the beginning. Define the ways in which decisions can be made (and by whom). This can be a major source of conflict when one partner makes a decision she considers small, while the other is upset that he wasn't consulted.

Define the communication strategies. How will you discuss issues and resolve conflicts?

Create a strategic business plan. This includes personal and corporate goals, timelines and strategies to meet the goals. Develop at least a three-year plan that describes the company's mission, goals, target markets, etc. When defining goals, be sure to include personal goals because partners may vary in these goals. Define what success looks like to make sure the partners are aligned in expectations.

Clearly define positions, tasks, duties and responsibilities. Use incentives to encourage higher performance, and make sure to measure performance. Make sure that all parties are valued, whether they are in sales or accounting or other roles.

Bring in individuals with complimentary skills sets. Make sure they value what each other brings to the table.

Make sure there are clear legal documents that support the partnership. Update as needed. Have clear, written partnership agreements.

Find ways to nurture the relationships in the partnership. People have joined the team to share a sense of something enjoyable. Make sure it is. Build the team.

Sometimes, business partnerships have to be dissolved and members must part ways. Much is written on how to handle the legal aspects of dissolving a business, yet less is written on the emotional aspects.

Once again, having the conversation early on about what to do if one party wants to leave the firm is important. Make sure to discuss what each party will want from the remains of a partnership and put this in writing. If you have to break up the partnership, try meeting with the other party in person to discuss the terms.

If you can work out an amicable resolution, this is advisable. If not, you might be able to get a neutral third party to mediate your discussion to keep the focus on the business aspects rather than personal or emotional issues.

If partners can define the "end game" up front, they stand a chance of ending the partnership on a positive note and remaining friends.

• Joyce E.A. Russell is the vice dean and the director of the Executive Coaching and Leadership Development Program at the University of Maryland's Robert H. Smith School of Business. She is a licensed industrial and organizational psychologist and has more than 25 years of experience coaching executives and consulting on leadership and career management. She can be reached at

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