The steps every entrepreneur should take to protect themselves against the five most common business disputes Future proofing is one of the most important elements of running a business.

None of us have a crystal ball to enable us to foresee what might happen six months, a year, or a decade down the line; but there are absolutely ways that we can mitigate against many of the common problems which companies face. When it comes to business disputes, we often see issues which may never have become a problem had the proper steps been taken at the outset. While it would be almost impossible to eradicate all forms of risk associated with building a business, there are steps which can and should be taken to ensure you're as protected as possible.

Partnership disputes
Research suggests up to 80% of business partnerships fail in their first year, with everything from communications breakdowns to financial issues being cited as common reasons. Naturally, it's only when two or more leaders begin working together as a partnership that all the parties involved can get a clear idea of whether it will be successful. But there is a lot of analysis and questioning that can be undertaken before a partnership is ever agreed, that will help minimise the chance of failure. An eagerness to set up a partnership can often see entrepreneurs rushing to sign up, without doing their due diligence and carefully considering what each partner brings to the table. Questions to ask include whether each partner has a clear defined role within the partnership – and the skills and expertise to flourish in that role; whether each person is adding value to the company – and whether that value is matched, as one partner putting a great deal more time, money or effort into the business can lead to disputes; and whether everyone has the same goals and
expectations from the outset.

Fuel Ventures found two fifths of entrepreneurs had been forced to buy out their co- founders due to a rift, with 71% of them stating it was due to a difference of opinion on the company's direction, 18% because the other person didn't share their values. While discussions around these factors may begin informally, it's crucial to ensure that – once everyone is ready to proceed – the partnership paperwork reflects all of the agreements and commitments that have been made. That way, if there are any disputes down the line, it is much easier to determine whether one or more of the partners has reneged on the agreements in place.

Structural disputes
Many disputes arise from a lack of structure within a business: without clear and efficient structures right across the company, it can be much more difficult to run the day-to-day operations – and as the business grows, this only increases the chance of a problem arising. Take for instance if a complex or ineffective governance structure has been put into place; this can easily lead to a lack of proper oversight, decisions being taken without the proper processes in place, and the leadership team not having accountability for their actions. Without the right financial and auditing structure, it becomes much more likely that there will be monetary issues going forward: anything from the business not being as tax efficient as it should be, to cashflow issues because processes haven't been put into place to flag potential problems. Having formalised and effective structures is a crucial part of mitigating against issues, because everyone is working in the same way, and there are checks and balances to ensure that problems don't spring up as a surprise one day.

Exit disputes
For many entrepreneurs, running a business might be a lifelong goal, which is why they don't have the foresight to plan for their potential exit. Whilst they may think they always want to work in the business, the reality is that business leaders often move on for a variety of reasons: including seeking a new challenge, retirement, and changing financial or family circumstances. In fact, Harvard Business Review found that in American start-ups, only 50% of founders were still CEO three years on, and by year four, only 40% were still leading the company. When it's time to move on, especially in a company where there are numerous partners or shareholders, the extrication might become difficult if there isn't a clear exit strategy in place. It might be uncomfortable to think about one or more partners leaving when you're in the midst of the excitement of launching a business, but having a clear strategy in place from that point is the best step to take, to ensure that there is less of a chance of a dispute in the future if and when someone does decide to step away.

Paperwork disputes
Businesses can find themselves having to defend their processes against disgruntled staff, suppliers or customers. It's not a position anyone wants to find themselves in, and it's much easier to rebuff the claims if there is strong paperwork in place and processes have been followed to the letter. Paperwork isn't necessarily everyone's favourite part of running a business, but without it, there is little to no evidence to prove that processes have been followed.

Studies suggest nearly half of all UK business owners feel 'overwhelmed' by the amount of paperwork they have to complete – but when there is so much on the line if this isn't done properly, it's a case of either bringing in expert help or making the time to ensure it's all done. Whether it's an employee lawsuit, legal issues due to licencing or tax payments, or audit failures, incorrect or missing paperwork can and does have profound impact for businesses; and even if they manage to survive through the disputes that arise, the impact on reputation and customer confidence can be profound.

Avoidable disputes
There are so many business disputes which could be avoided if a little more time and consideration was given to ensure that everything is done properly. In the excitement of building a business, and the rush to get to market, it's an easy mistake to make. But by not taking the time to create strong foundations, to ensure that absolutely all agreements, paperwork and contracts are legally sound, there is a real chance that an issue will arise in the future. If a business is going to stand the test of time, spending more time double-checking
everything, preparing sound agreements, and undertaking thorough due diligence are the crucial steps that any owner can take. It might be frustrating to spend so much time completing these steps, but it will be much more frustrating to have to take time away from building your business to settle disputes in the future; as they say: 'haste makes waste'.