The Pitfalls of Partnering in Business


If you’ve been in business for a while or if you’re just starting out, you may consider a partnership. Maybe you need financing. Maybe you need administrative help. Maybe you’re great at the administrative tasks, but need a little help on the creative side. So partnering up sounds like a great idea, right?


We’ve all heard those horror stories of partnerships gone south because of creative differences, financial issues, or the poor management skills of one or both parties.

Here are 6 pitfalls that plague partnerships:

1. Expectations

Even if you lay out expectations on the front end of the partnership, differing views on what each partner will bring to the table could mean trouble is coming. Especially in a 50/50 partnership, if one party is unwilling to budge on an opinion or decision, it could end up costing you time and money.


2. Money

The root of all evil? Not necessarily, but it’s certainly more of a focus when you’re having to share the profit of hard work. More often than not, no two people handle money in the exact same way. Differing opinions on how to make, spend, save, and pay out can cause huge rifts between business partners.

3. Compensation

If each partner has equal ownership of the company, does each make the same amount of money? Did one partner invest more money, but one made the company more money? Does each partner put in the same amount of work and hours with differing results? How do you determine if equal compensation is more fair than compensation based on how much “sweat” you put in? Oh, the questions.

power play

4. Power Play

Who makes the big decisions in the company? If you have a 50/50 partnership, it should be equal responsibility, right? Maybe in theory. However, each partner could feel they should have the final decision based on what role they play in the business. Consider appointing a trusted third-party arbiter or board member. In the event that neither partner can come to an agreement, the third-party can end the stalemate.

5. Commitment Issues

What if your partner isn’t committed as fully as you are to the business? Unfortunately, that’s a question that can’t really be answered until you’re already in business. Oftentimes, initial enthusiasm for a new, exciting business venture can disguise a lack of commitment. Beware this pitfall, because customers are very keen. If one partner has lost interest or enthusiasm, it could hurt your brand and reputation within the community.

6. Reputation Matters

Seriously. If a prospective partner has a questionable or bad reputation within the community or business world, that could bode badly for your partnership. Speak with their former work colleagues to see if there are any red flags that you need to know about. If they are financing your business venture, verify that they actually have the money to back you. Do your homework.

Now ask yourself this question:

“Do I really need a business partner?”
Maybe for money. It could, however, be better to hire someone to do what you can’t instead of giving them stake in the company.


If you decide that you need a partner, get a start-up attorney. If you feel like you’ve reached a reasonable agreement and have hashed out all of the big issues listed above, put it in writing. If your prospective partner is unwilling, perhaps you should reconsider. Ultimately, the choice is yours to decide what is best for your business.

What are your thoughts on and experiences with partnership? Got any hacks on how to avoid these pitfalls? Let us know in the comments below!