Conflict is an inescapable part of life, but partners in business have a lot riding on the way they handle it. Even co-owners who normally run a smooth operation may not always agree on every aspect of managing and growing their enterprise. These tensions don't have to throw a business into chaos necessarily. Some disputes can be easily resolved, but others have the potential to spiral into bitter feuds that could lead to the dissolution of the business in extreme cases. So, before a conflict irreparably disrupts your business, consider these solutions for constructive negotiations.
Listen, don't judge
A negotiation is sometimes thought of as a war where both sides must be tough and unyielding to get what they want, but this is a misconception. Instead, co-owners should view it as a process for maneuvering inevitable speed bumps while keeping their eyes on the overall bigger prize—preserving their business.
"Your objectives should be to leverage the strengths of each business partner and recognize the strengths that each person brings to the company," says Florida-based small business consultant Denise O'Berry.
For example, a very common dispute among business owners involves one partner feeling like he or she is handling more than their fair share of work. To avoid this, O'Berry suggests that the owners document a clear vision of their company—what they're trying to accomplish, the talents and skills that each side brings, the roles and responsibilities of each partner—at the beginning of their relationship to guide them in future situations and mitigate confusion.
To keep a negotiation amicable, O'Berry advises withholding judgment about your partner's intentions. "Listen to what the person is saying at face value," she explains. "As you're listening, probe to understand more about where they're coming from. Don't just take a position against something. Listen to their concerns."
Asking open-ended questions can help you get to the bottom of things in a non-threatening way that engages the other person and shows respect for their position. For example, when one partner raises a concern or objection, you can ask: "Why is that?" Or, "How do you think we would do [what you're suggesting]?" Or, "What is our approach?" "Open-ended questions like these [clarify] the issue so you can resolve it and make that person feel comfortable," O'Berry adds.
Be flexible and don't be afraid to consider outside help
Each negotiating session should have a particular goal to keep things on track. The goal can be as perfunctory as hashing out the ground rules and setting up schedules in early sessions to a more substantive agenda later on. While you should always remember what you ultimately hope to accomplish by the end of the negotiation, it's wise to be flexible in what you're willing to accept.
"You should always have in mind what you can do if the negotiation doesn't work out," says Bill Painter, president of Tennessee-based Business Negotiation Services. "Have a fallback position because then you don't feel trapped to perhaps accept a bad deal." Painter suggests knowing when to walk away from the negotiation table—the point at which it doesn't make sense for you to continue—and seek redress elsewhere. One alternative is to bring in a mediator.
According to Painter, a mediator primarily facilitates the negotiation—such as keeping things neutral and making sure that all the relevant points are addressed—while both sides continue talking. "The mediator acts as a facilitator and that would be very helpful if people are struggling to get their point-of-view across or there's unequal strength levels," Painter explains. For example, "one side is a very accommodating person and the other side is a shark. Then you want to be able to have the person who is more timid to be able to state his case in a safe position. A mediator would be good for that."
Even though each partner might have a specific function in the life of the business—one partner could be the "ideas" person and the other partner might put those ideas into practice—Painter admits that questions about pay and ownership can sometimes be hard to assess by the owners themselves. He suggests bringing in an evaluation expert to help determine what each side is contributing. In any case, disputes should be handled promptly and professionally for the sake of the business.
"You want to keep the business relationship in mind," Painter adds. "You don't want to get personal with the other person. Don't let things fester. [Otherwise] you're probably going to see that business dissolve or one of the partners leave because you can't maintain that tension forever."
Put the agreement in writing
Conflicts may be unavoidable, but they don't automatically have to tear the owners apart. On the contrary, employing a measure of reason and a clear-headed examination of the situation may be all it takes to settle disputes to everyone's satisfaction.
That's been the experience of Dave Howell, owner of Blue Planet Marketing, a Texas-based consulting firm, and a SCORE mentor in the San Antonio chapter. Howell owned an insurance company with two other partners. One of the partners—who was not an original founder—felt that his contribution and value to the business had gone up over time, and he deserved a bigger share of ownership. Because it was an insurance company, it was easy to track the revenue he had generated.
"He contributed more than what anybody had thought," Howell says. "We did some investigation and analysis, and found out that what he was thinking was actually correct, so we increased his share from five percent to 10 percent."
With a different company he owned, Howell and his partners were approached by an outside party who wanted to buy it. The contributions of the four partners were not equal, which raised serious questions. In the end, they were able to hammer out an agreement among themselves—but, more importantly, Howell was shocked to see that he didn't have anything in place to address the situation of a buyout before it came up.
When he mentors business owners these days, Howell urges them to consider issues that could arise in the life of a growing business and figure out a method for resolving them in writing before they flare up. "Think through all of these issues upfront with your partners and put them in a contract or bylaws, so that when the contingencies occur, they'll all work out."
As with any binding contract, particularly one as important as spelling out the duties in your business partnership, it's likely a good idea to consult with a lawyer to ensure all parties are treated fairly. To get a sense of some of the terms that an agreement can spell out, or for those who prefer a more do-it-yourself approach, resources such as LawDepot and Partnership Agreement Template provide customizable models for business co-owners.
Negotiation takes clear communication, respect for the other party, knowing when to compromise, and remembering that the ultimate goal of any dispute is the ongoing survival of the business itself.