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The dictionary definition of the word ‘partnership’ is the state or condition of being a partner; participation; association; joint interest; the relation subsisting between partners and the contract creating this relation.
A partnership is a great way to start a business. You have the benefit of a common goal; shared expertise and a perspective different from your own on several matters.However, there are also some negative aspects to a partnership as opposed to sole ownership. Things can sour badly over petty issues which may prove harmful for the business. There are several things that can go wrong in a partnership. Among many others, the top three reasons why partnerships fail are:
1) Lack of common vision:
As impossible as it sounds, a lot of times people enter into a partnership without having a common goal or vision. This may lead to friction between them adding tension to the environment thus making it damaging to the business in the long run.
2) Poor Communication :
This is one of the biggest contributors to the failure of partnerships in general. All partners in a firm absolutely should establish a clear channel of communication between them which will lead to clarity in decision making. Effective communication is an excellent tool to resolve conflicts and settle differences.
3) Lack of a Business Plan :
A good business plan must be established before you venture into the unknown territory of ‘business’.The plan should clearly state each partners role in the organization and his/her level of ownership and the consequences of incompetency. The steps for making any decision, especially those related to finance, should be clearly outlined.
If a Partnership can avoid these three pitfalls, then the chances of the business failing are far fewer.However, I feel that a partnership is like a marriage. You have to work hard at it to make it work, and at times, that could mean a compromise from either end. It may seem frustrating at times but the rewards make it all worth it.
