According to N.C. Secretary of State Elaine F. Marshall, “new business creation filings for 2021 grew 40% over 2020 to total 178,300 new North Carolina businesses.” If you are one of these new business owners, you know how challenging it may be to work with business partners. Here are three steps you can follow to avoid conflict with your business partner.
1. Do Your Research
If you are starting a new business with a partner, there are a few things you should be doing to help with any conflicts that may arise. The first is conducting your own research on your potential business partner. Taking the time to research your partner’s work experience, business knowledge and other determining factors that may show their level of expertise is important.
Launching a business or company is not easy. Putting in the work to not only find a credible, trustworthy, reliable, and dependable business partner is not something that happens overnight. The initial step of finding the right partner is not a process that should be rushed. The success of your business or organization depends on you doing your research.
The key to developing and maintaining a business relationship is communication. Having an open line of communication between you, your business partner and even your team is an important part of preventing or dealing with conflict. Do you know the communication style of your business? Do you the communication style of your business partner? These are questions you should know the answer to.
A 2021 article from Indeed lists four communication styles that may impact a work environment. The four communication styles include:
- Passive Communication Style
- Aggressive Communication Style
- Passive-aggressive Communication Style
- Assertive Communication Style
According to the article, “When individuals exhibit different communication styles, it’s easy for conflict or misunderstandings to occur. Understanding the characteristics and tendencies of different communication styles can help us to effectively interact with someone who has a different style.”
No one person communicates in the same way and knowing this will not only help you personally but it will also help your business too.
3. Keep Detailed Records
Having a system set in place for how you keep and store your records is also an important step in avoiding or dealing with conflict in a business relationship. For tax purposes alone, keeping records of your financial statements, reports, invoicing, and accounts will save you time and stress. With advancements in technology and digital software it has become simpler to store documents, and other confidential information. Here are examples of records, but not limited to that you should be keeping:
- Accounting/Bank Statements
- Tax Filings
- Insurance Forms
- Legal Credentials
4. Have Clear Bylaws or An Operating Agreement
The last step you should be following to avoid conflict and the most important one of them all is having clear bylaws or an operating agreement in place. Taking time to outline specific guidelines and policies helps in many ways.
Your agreement should have understandable language both parties can follow. An operating agreement for your business might include elements on:
- How Conflicts Are Resolved
- Ownership Interest
- Procedures On Decision Making
- Actions On Who Can Publicly Speak on Behalf the Business
- A Non-Compete Clause
Your agreement should cover all areas of business that potentially may cause conflicts or disputes between you and a business partner.
Making sure your records are easily accessible and accurate is an important part of managing a business. Keeping and maintaining detailed reports also helps you and your business partner evaluate and assess how successful your business really is. Following this step could save you the trouble of navigating through conflicts with your business partner.
As a business owner, you have to make difficult decisions every day. Make sure you are doing your due diligence and staying up-to-date on any laws, regulations, or directives that may impact your company or organization.
If you or someone you know needs help, contact Brinkley Walser Stoner today to schedule an appointment with one of our experienced attorneys.