One of the most challenging situations we see as business advisors is when long-term friendships or family relationships break down after embarking on a business venture together. What begins with excitement and shared enthusiasm can quickly turn into tension and conflict when expectations aren’t aligned.
In the rush to bring an idea to life, it’s all too easy to incorporate a company online, invest capital, take on financial commitments, and begin trading—often without taking the time to define roles and responsibilities clearly. But once the initial momentum slows and day-to-day business operations take hold, disagreements emerge. Who is responsible for what? Who is putting in more time? How should profits be shared? These are questions that can strain even the strongest personal relationships.
It’s natural to assume that a trusted friend, sibling, or long-time colleague would make the perfect business partner. After all, you share a history and a strong foundation of trust. But in reality, trust isn’t usually the problem—it’s the unspoken expectations about how the business will be run and what each person is willing to contribute or sacrifice that lead to issues down the track.
Common Sources of Conflict
From our experience, the most common areas of contention between business partners include:
- Differences in commitment and work-life balance
- Remuneration expectations
- Profit-sharing arrangements
- Use of personal assets to secure business funding
- Differing visions for the business’s future
- Use of company resources, such as vehicles or office space
Unfortunately, these crucial conversations are often overlooked in the early stages of setting up a business. Without addressing them upfront, misunderstandings can escalate into serious disputes, putting both the business and the relationship at risk.
Setting Clear Expectations
It can be difficult for friends or family members to openly discuss their expectations, particularly if they worry about damaging the relationship. To navigate this, we recommend a simple yet effective exercise:
Each potential business partner should take time individually to write down their expectations, non-negotiables, and concerns. This should include what they are willing (and not willing) to contribute—whether financially, in time, or in responsibility.
Once completed, these lists should be shared and compared. Any conflicting points must be addressed and resolved before moving forward with the business. Ideally, this process should be facilitated by a business advisor who can guide the conversation, provide clarity on business implications, and help reach an agreement. If fundamental differences cannot be resolved at this stage, it may be a sign that a business partnership isn’t the right move—better to realise this now than risk irreparable damage to a valued relationship.
Formalising Agreements
Once agreement is reached, it’s crucial to document everything properly. This typically involves working with a lawyer to draft a Shareholders’ Agreement and, where necessary, updating the company constitution. We also strongly recommend defining clear job descriptions for each business partner to establish responsibilities and prevent future misunderstandings.
With well-defined roles, formal agreements in place, and expectations aligned from the start, business partners can set themselves up for long-term success—both professionally and personally.