Why Business Partners May Need Couples Counseling

It is terrific for budding entrepreneurs to come together to pool their talents in forming partnerships, but there are a number of things that need to be considered in doing so.  Two or more people who have alot of energy about developing a product or delivering a service has been one of the major driving forces in our economy for many years, and there can be great synergy involved in the process of getting something like this going.  

It seems like there isn't alot of consideration about the matter of joint and several liability however, as well as the fact that partnerships can be alot like marriages and other primary relationships.  After the 'honeymoon phase' when alot of the initial enthusiasm for getting a startup going, there can be squabbles and bickering about issues that can ultimately bring a partnership down if not handled correctly and in a healthy manner.  In what I've read online I haven't seen alot of attention paid to the issue of joint and several liability in a partnership.  What this means is that whatever actions or decision one partner makes, the other partner or partners are liable as a group and as individuals for the actions of each other.  

While there may also be fancy ways to name or craft agreements among partners, the issue of joint and several liability can't be escaped merely by some legalese that doesn't capture the true nature of the business venture.  Accounting principles such as 'substance over form' will hold that no matter how things are structured in terms of the business agreement or partnership agreement (if there is one), the substance of the business is what is most important.  In other words, if it walks like a duck and talks like a duck, it is a duck.  Even if the partners call it a limited liability corporation, for example; if it functions and behaves like a partnership, it will be considered a partnership for accounting purposes, and this can have definite tax ramifications.  


I say all this not to scare anyone from entering a partnership with someone else, but to emphasize that both or all partners need to be 'on the same page' and to be in total cooperation with each other.  When snags are encountered in these arrangements, business partners are increasingly turning to couples' counseling to help resolve the matter.  This has alot of benefits and can be a 'pennies on the dollar' investment when compared to having to deal with problems down the road when one partner winds up driving a partnership into the ground and the other partners are left to pick up the pieces.


Some of the benefits are improved communication, greater ability to successfully resolve impasses and conflicts, more harmonious working conditions, better understanding and visioning for the business, improved overall performance, less anxiety about the future of the endeavor, and more trust in each other and the reasons a partnership got started in the first place.   

My next installment will be about the benefits of a well-crafted partnership agreement.