Conflict is a part of life, but it’s something to avoid in business as much as possible. A conflict of interest could lead to serious business problems, particularly if your business partner is invested in something outside the company.
In order to avoid conflicts of interest, here are a few things to do:
#1 Be honest about outside investments
Do you know where your partner’s money comes from? They may not want to disclose everything about their income, but it’s a smart way to ensure that there are no conflicts. If you each know what outside investments you have, it will help you to stay mindful of anything that could lead to conflicts.
#2 Avoid working with family members
If your business partner is also your child, parent, sibling, or relative, you can bet that there will be conflicts of interest. Not only will they have their own agenda for your company, but it’s much harder to communicate effectively with them thanks to your familiarity with each other. If at all possible, ONLY work with people who are outside of your immediate circle of friends and family.
#3 Have clear goals for your company
Do you know what the business plan for your company includes? Does your company have a 5- and 10-year business plan? If not, it’s very likely that you and your partner can end up working at cross-purposes. Your business plan keeps things clear, ensures that everything remains above board and ensures that you work toward the same goal. It’s one of the best ways to help you avoid conflicts of interest with your company!
#4 Keep open lines of communication
If your business partner doesn’t feel comfortable telling you about sensitive issues, it could lead to problems in your company--not the least of which is a conflict of interest. Should someone approach your partner with a gift or an enticement to convince him/her to do something that would benefit them, do you think that partner is comfortable telling you? Evaluate how comfortable you would be telling your partner about something if the roles were reversed. If there isn’t a certain degree of comfort in communication, you need to start working on being honest and up front with your business partner.
#5 Work for the same people
If you and your business partner work for different clients, you could end up with a huge conflict of interest problem. Make sure that you only take on clients together, as that will prevent any conflicts of interest from arising. Vet each client together to ensure that there is nothing that could be a conflict, and you’ll keep everything above board.
The truth is that you NEED to trust your business partner, or else your company is doomed to failure. It’s essential that you find a partner that is open and honest, and who communicates clearly. Without that honest communication, the risk of conflicts of interest is VERY high.