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Why most business partnerships fail

On Behalf of | Apr 19, 2023 | Business & Transactional Law

When business owners in Idaho decide to go into business with someone else, they do so with visions of success. Unfortunately, statistics show that most business partnerships fail. While each business relationship is unique, some reasons for failure are more common than others.

Mixing personal relationships and business

It’s often very tempting for entrepreneurs to go into business with a close friend or family member. Unfortunately, money has the potential to change everything. It’s hard to separate the business side of the relationship from the personal components, which results in a long list of potential disputes among partners.

Lack of success

Owning and operating a business is a difficult concept, which is why 20% of startups fail within their first year. It’s not uncommon for the financial stress associated with a struggling business to create hostility between partners. This hostility routinely leads to the partnership dissolving and the closing of the business.

Different levels of commitment

Owning and operating a business requires a great deal of personal commitment. This doesn’t only apply to finances, as it also takes a lot of time and energy to launch and sustain a successful business.

When one partner is more dedicated to the business than the other, it’s not uncommon for tensions to rise. This isn’t always a problem, as many partnerships start with an understanding that absolves one partner from being directly involved in daily operations.

Different values

Each person involved in launching a business has his or her own goals. Some people want to create a workplace unlike the ones they’ve worked in before. Others want to own their own business to get rich.

Business partnerships fail for any number of reasons. These four reasons are the most common causes of these failures.