Skip links

15 ways to overcome conflict between startup cofounders or business partners

While our personal relationships are complex, business partnerships are even more so.

The external stresses of courting investors, handling staff, speaking to the media, and hitting financial goals add to the multifaceted complexities. 

Negative cash flow, a lack of market research, or too rapid an expansion are all factors that can lead to a startup’s demise.

But did you know that co-founder rivalry is the leading cause of failure in companies with two or more founders? According to one report, 65 percent of promising startups fail due to co-founder disagreements.

One of the most important decisions an entrepreneur can make is choosing the right co-founder with whom to start a company. Maintaining a safe and harmonious partnership with your business partner is crucial to your startup’s potential success. If you started a business with someone else or are thinking about doing so, you need to know how to handle co-founder conflict before it destroys your company.  As conflicts between business partners eventually arise, the aim is to figure out how to best manage the dispute and use it to drive the growth of your company. 

A co-founder relationship should be viewed with the same respect as every other form of relationship. Failure to listen to your business partner can lead to frustration and eventual separation from your co-founder or your company. You will boost the company’s bottom line, foster collaboration, and maximize productivity if you manage co-founder conflict effectively.

We have provided advice below about how co-founders can effectively sustain a healthy partnership amid the ups and downs that a company usually experiences. Here are the 15 ways startup cofounders or business partners can overcome conflict.

Are they the right cofounder or partner for your startup business?

1. Have a strategy in place. 

You should be ready for a confrontation before it occurs.

Write down your positions, responsibilities, benefit-sharing, and dispute resolution techniques. You and your partner would have something to relate to in the event of a disagreement if you create a founders’ agreement.

How would you go about resolving the conflict? Can you enlist the help of a third party? Will you divide decision-making in order to play to each other’s strengths? There will be no surprises when a dispute occurs if an arrangement is reached ahead of time. Instead, you’ll have a sound strategy to execute. 

Your founders’ agreement should include your company’s name and owners, as well as details about your company. Furthermore, the agreement should cover each founder’s obligations (for example, who is responsible for keeping your accounting books), company ownership, owner liability, salary distribution, and decision-making procedures. Your agreement will help you prevent or settle the conflict by resolving these issues. Creating the founders’ agreement often allows you to notice problems early on before they become a big problem. You should work out where you may disagree and how you’ll settle your differences.

2. Be Profoundly Transparent

The best way to get through the obstacles is, to be honest with yourself and your cofounder. In certain situations, the truth is painful, but failing to discuss both your and your cofounder’s flaws and strengths will lead to problems that become more serious as the business expands. Personality clashes arise as the organization faces more challenges or has greater performance.

3. Face the problem head-on

You raise the risk of co-founder conflict worsening, recurring, or permanently destroying your partnership and business if you wait too long to fix it. You might assume that avoiding confrontation is the best way to save a relationship. Embracing tension, on the other hand, might be more helpful to workplace collaboration.  Your overall team dynamic will improve if you and your co-founder can communicate effectively and work through conflict. 

When a misunderstanding occurs, arrange a private meeting with your co-founder. Employees could lose respect for you if you address co-founder disagreements in front of them. It can also cause your partner embarrassment.

 

4. Develop Clear Lines Of authority 

The startup process is both exciting and stressful. Although it’s great to have a cofounder with whom you share personal chemistry, it’s critical that you both have clearly defined roles and complementary skill sets.

Many personal friendship-based business relationships do not withstand the ups and downs of startup life. It’s important to have a partner who brings a variety of expertise to the table.

5. It’s a two-way street

During periods of disagreement, pay attention to what your co-founder has to say.

While you might be passionate about voicing your point of view and explaining why you are right, there must be some compromise. Some disputes will be won, and others will be lost. You must be humble in all cases.

Approach disagreement with the mentality that you aren’t always right, and strive to consider your cofounder’s viewpoint. If you and your partner play to each other’s strengths, your company will be a huge success. Your co-founder would be better at some things than you are. Recognize the shortcomings when showcasing each other’s properties. Bear in mind that your common aim is to run a profitable company, not to have full influence. 

 

6. Keep in mind that you’re all in this together.

A startup’s early stages can be the most unpredictable. When you add a cofounder to the mix, things can get much more complicated. However, the best way to keep a healthy relationship with your cofounder is to remember that you’re all in this together and share joint responsibility for the business. You must also understand your exact position and how much weight you must carry in order to be effective.

 

7. Come up with a solution to the problem. 

Once again, the founders’ agreement should spell out how you’ll reach a decision. You will bring decisions to a vote if you have more than two founders.  Your company, not your personal agenda, should be the focus of the solution. You and your co-founder should evaluate the benefits and drawbacks of various solutions together. 

If you and your partner are unable to settle your dispute, you may need to enlist the support of a third party, such as a lawyer.  You and your co-founder, just as in a marriage, must work together to overcome conflict, not against one another. You and your co-founder will settle disputes before they damage your startup by being organized ahead of time and prioritizing its well-being.

8. Reduce The Ego 

Comprehending that business decisions are not personal and should not be viewed as such is helpful.

Emotions may also be thrown into the mix, making the decision-making process more difficult. Both co-founders must maintain a calm head and work together with their egos as small as possible.

 

9. Don’t micromanage your co-workers 

Co-founding a company is a balancing act. You’re always struggling with problems that don’t seem to go anywhere, as well as new responsibilities. It is sufficient to remain concentrated on your unique responsibilities. Don’t be concerned with what your co-founder is up to. Make it a point to meet once a day to share your success and challenges, as well as your priorities and responsibilities for the rest of the week.

 

10. Expectations must be in line

This sort of heart-to-heart conversation with your co-founders should happen early in your working relationship. Any relationship, particularly between partners, is bound to have fights and disagreements. Make sure you treat it like any other marriage and maintain free and fruitful contact.

Do you have the top traits of successful startup CEOs?

11. Consult a Coach 

Since things aren’t always rosy in the startup world, you should try to work with a mentor. You must ensure that you have the tools required to succeed even in the face of adversity.

Speaking with the right coach will assist you in identifying what is going well, allowing you to focus on your strengths. It will also assist you in finding problems that are holding you back. 

 

Do you have the right business mentor?
Do you have the right business mentor?

 

12. Allow time for strategic objectives on a regular basis

The process of creating a healthy cofounder partnership is close to the process of creating a healthy marriage. You’ll need clearly defined responsibilities, daily contact, and a compassionate spirit. Most importantly, take a step back and match your current vision, priorities, and strategies with your future vision, priorities, and strategies. These are the motivational sessions that keep you motivated and on track when the day-to-day grind gets too much.

 

13. Keep the flame alive

Long ago, there was a spark of an idea that developed into your startup. It piqued your interest to the point that you stayed up late and arrived early to complete projects. Always keep your goal at the forefront of your mind, and remind your cofounder as much as you can. Keep it lighthearted. Keep in mind what’s important. Try to concentrate on what you have power over ignoring other things which you don’t have control over.

 

14. Keep your eyes peeled for the prize 

Due to the extreme difficulty of starting a business and the large egos involved, cofounder relationships can be challenging. However, co-founders must remain focused on the end goal: building a profitable company. That means reaching a consensus, being fair even when it’s tough, and not allowing personality clashes and disputes to get in the way of doing what’s best for the business.

15. Create a barrier so you can reconcile

When you’re with somebody all day, every day, it’s easy to get complacent. Distance, even if only for a short time, helps each of you to grow as individuals, while still allowing you to enjoy each other when you reconnect. Conferences and executive education programs will provide you and your organization with useful knowledge. You’ll have plenty of fresh ideas to share with your cofounder when you reconnect.

 

Final Takeaway

If all of this feels like too much for you to manage on your own, consider hiring a coach or therapist.

You and your co-founder have a board of advisors that assist you in strategizing about fundraising plans, inventory management decisions, and tactical swivels. Why not enlist the aid of an advisor who can keep you linked to one another and to the company? When change is daunting, find a third party to keep you vigilant and keep your foot on the pedal. 

Relationships aren’t always stable. They cycle through peace, discord, and repair, ebbing and flowing. There will always be fractures and stresses in the form of conflict, but there are ways to patch them up. You’ll notice that how you handle each other as founders ripples out into the rest of the business and seeps into the community as you work to strengthen the relationship.

You’ll start giving your team clearer guidance on how to function, support each other, get on well, and deal with the intrinsic stresses that complementarity brings. And it’s at this point that strengthening the co-founder partnership begins to help the company’s bottom line.

 

If you have just started a business or planning to start one very soon, use our AI-powered business assessments to help you make fast well-informed decisions on every aspect of the business.

If you enjoyed reading this article on how to start a business with no money, you should definitely check out more of our articles on our blog.

Leave a comment