When business partners disagree on direction, stop arguing about the plan and get each partner’s actual goal on paper first. Most direction fights are two different personal goals dressed up as a strategy debate. Then decide who owns which decisions, put the same numbers in front of both of you, and set a date to choose. If you still can’t agree, bring in an attorney and a CPA to review your agreement before the disagreement hardens into a buyout.
Why do business partners disagree on direction?
The splits in a service business tend to repeat: grow or hold, reinvest profit or take distributions, and who runs what. Each sounds like a business question. Underneath is usually a personal one. Picture one partner with two kids starting college and another who is ten years younger and wants to build something worth selling. Both are being reasonable. They just aren’t running the same business in their heads.
It’s worth handling early. Writing in Harvard Business Review, Travis Howell, Steven Gray and Esther Sackett note that up to 43% of founders are ultimately forced to buy out a cofounder because of interpersonal rifts and power struggles. Julia Austin of Harvard Business School calls conflict within the founding team one of the primary reasons high potential startups fail. Your business may not be a startup, but two owners with different goals carry the same risk.
How do you get two partners back to one decision?
Visible goals give you something to negotiate. Hidden goals only give you something to argue about.
Next, write down who decides what. One partner owns sales and client work, the other owns delivery and the team, and anything over a set dollar amount needs both of you. If that has never been written down, the approach in holding a team accountable with no org chart applies to partners as much as to staff.
Then put a date on it. Pick the one decision that unblocks the rest, the way I describe in your business needs one decision, and agree on when you’ll make it. The way I see it, a disagreement with a deadline is a decision in progress. Without one, it becomes the culture.
What if one partner wants to reinvest and the other wants distributions?
I have a bias here. I handled the finances at a professional services firm I helped grow to more than a hundred people across two countries, including budgets and forecasts, and I’d rather two partners argue over a forecast than over a feeling. A forecast can be checked next month. A feeling can’t.
Pick a short list of numbers you’ll both look at every week. The scorecard numbers worth tracking weekly in a service business are a good place to start. How distributions get paid and taxed depends on your entity type and your agreement, so that part goes to your CPA before anyone promises a figure.
When is it time to talk about a buyout?
Many owner agreements already say what happens in a deadlock. Jay McDaniel, writing in the Business Divorce Law Report, explains that a well drafted operating or partnership agreement addresses deadlock, often through a shotgun provision where one owner sets the price and the other decides whether to buy or sell at it. Whether yours has one, and how it would be applied, is a question for your attorney. The tax side of any buyout is a question for your CPA. I’m a coach, and nothing here is legal advice.
Either way, get the business ready. The work in what exit readiness means for a small business owner helps whether one partner buys the other out or you stay together.
Frequently Asked Questions
Can business partners run a company with different goals?
Yes, for a while, if the goals are written down and the plan serves both. It breaks down when one partner needs cash the other wants reinvested and nobody has agreed on the split.
Should business partners use a mediator?
A neutral third party helps when you keep repeating the same argument. A mediator handles the dispute. A coach helps you make and keep the operating decisions. If a legal claim is involved, talk to an attorney first.
What is a buy sell agreement?
It’s an agreement between owners that sets out who can buy an owner’s share, what events trigger a buyout, and how the price gets set. Have an attorney draft or review yours, and bring your CPA in on valuation and taxes.
How do 50/50 partners break a tie?
Decide how before you need to. Split decision rights by area, name a tiebreaker for defined issues, or agree on an outside adviser. Anything that changes ownership belongs in your operating agreement, written with your attorney.
Find Out What’s Actually Stuck
If you’re not sure whether the disagreement is about direction or about something the business hasn’t built yet, take the free Phase Check. It takes a few minutes. If you’d rather talk it through, here’s how my coaching works.
Anthony Spitaleri
Business Performance Coach
anthonyspitaleri.com
About Anthony Spitaleri
I’m a Business Performance Coach. I work with owners on the decisions that let a business run without them: the first key hire, a sales team that doesn’t depend on the owner, and the numbers worth watching each week. I worked through those same decisions at a professional services firm I helped grow from a small team to more than a hundred across two countries, where I found and fixed the gaps in sales so it could scale, built the hiring process and handled the finances. Start with the free Phase Check, or read about working with me.