Partnership disputes can create serious business-wide problems. These conflicts can lead to financial troubles that might affect the company’s future.
Understanding the financial effects of unresolved partnership disputes is important for anyone who is on the fence about pursuing litigation.
The productivity domino effect
When partners disagree, productivity often suffers. Time spent arguing or avoiding each other takes away from the time that each individual needs to spend working on the business. This decrease in productivity can result in lower profits. Employees may also notice the tension and become less motivated, leading to even more inefficiency.
Day-to-day delays
Partnership disputes can also cause delays in decision-making. Important decisions may go on hold because partners cannot agree. These delays can prevent the business from responding quickly to market changes or new opportunities. Competitors may take advantage of this, leading to lost opportunities for the business.
Short-term solution costs
The costs of managing the dispute can add up quickly. Partners may spend money on mediation services or other methods to try to resolve their differences. These costs can take a significant portion of the business’s budget. Additionally, the stress of the conflict can even lead to health problems for the partners, which might result in medical expenses or time away from work.
Taking a hit to public perception
If disputes remain unresolved for too long, they can damage the business’s reputation. Customers and suppliers might notice the conflict and lose confidence in the company. This loss of trust can lead to a decline in sales and difficulties in maintaining supplier relationships. New customers and suppliers may hesitate to work with a business that appears unstable.
Statistics show that 70% of business partnerships fail, meaning that a company with disputing partners is definitely not safe. It is important to address and resolve conflicts promptly and directly, even if it means resorting to litigation.