Business relationships can be as complicated as personal ones. Just like a personal relationship, the connection can turn south as soon as conflict arises. In many cases, an unresolved conflict can mean the end of the business. In order to find a resolution, sometimes co-founders need to involve an attorney – one that knows local laws and has a history of helping co-owners find solutions.
Common Types of Co-Founder Conflicts
Equity and Compensation
Money is at the heart of many co-founder conflicts and can turn what once was a relationship of mutual respect into one of resentment. Everyone wants fair compensation for his or her part in the business, but sometimes, that split isn’t always 50/50. Deciding equity and compensation is a delicate topic for co-founders, and having a neutral voice may make it easier to come to an agreeable conclusion.
Roles and Responsibilities
Most founders start the business relationship with well-defined responsibilities, but what happens when one founder neglects his or her role? What about when responsibilities change? Conflict arises when one party oversteps or abandons responsibilities that were previously agreed upon. People get burnt out or underperform, and discussions need to happen as to how to keep the business moving forward.
Labor and Employment
When it’s time to downsize or hire on more employees, co-founders might disagree about how the process should be handled. Your co-founder might have a specific idea of how hiring and firing should go, while you have other ideas. It can be difficult to find solutions to employment issues while following the law, leading to disputes between founders.
As a business grows and develops, the direction and vision of co-founders may change. The same can be said for times the business finds itself in a slump. Often, co-founders are in conflict for how to solve a problem or move forward during a boom. Maybe one founder wants to go through with an acquisition while the other thinks the business should stay as-is.
How to Resolve Co-Founder Conflict
Don’t Avoid Conflict
When co-founders try to dodge an inevitable conflict, things tend to escalate. Instead, address the issue, stay in contact, and work closely together. There’s a reason you started working together in the first place, and finding a resolution is better sooner than later.
Create a Business Plan
If two founders are in conflict, they may be thinking more about the present than the future. However, creating a plan for future conflicts can help avoid them completely or come to a resolution faster.
Be Willing to Compromise
Although the goal is to come to a resolution with your co-founder, that doesn’t mean that you should abandon your own beliefs. Compromise can be difficult, but the willingness to meet halfway will get you and your co-founder much further. Put in effort to see the other side of things, which can help your co-founder feel more at ease with the solutions you propose.
Hire a Co-Founder Resolution Attorney
Sometimes, a neutral third party can give clarity to your situation. A skilled professional like a business dispute attorney can either serve as a mediator to help co-founders come to an equitable resolution. Other times, one founder may wish to leave the business relationship. In that case, their attorney can provide representation to ensure a quick and fair split.
Are you looking for a resolution for your co-founder disputes? Atolles Law can help you find the best outcome for your business and everyone involved. Contact us today to schedule a consultation to learn more about the legal support we can provide.